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Regulation and Compliance > Federal Regulation > FINRA

FINRA Fines Raymond James for Violating Customer Privacy

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Raymond James (RJF) has agreed to a pay the Financial Industry Regulatory Authority a $500,000 fine related to claims that it violated customer privacy.

FINRA says the broker-dealer, which signed a letter of acceptance, waiver & consent last week, agreed to settle the matter without admitting or denying the allegations.

The focus of the settlement was Regulation S-P, which aims to protect client privacy. Specifically, FINRA argues that Raymond James’ staff that helped advisors moving over to the broker-dealer set up accounts using pre-populating forms with client information taken from their prior forms from January 2011 to January 2015.

This nonpublic information included client addresses, phone numbers and account details. However, according to FINRA, this information was not obtained via client consent, as stipulated by Regulation S-P.

“Raymond James takes the privacy of clients’ personal information extremely seriously and has detailed practices in place to safeguard this information,” the company said in a statement, adding that client information was “only shared between companies for business-related purposes as advisors transitioned from one firm to another.”

FINRA, however, argues that the firm “failed to make any determination as to whether the recruits, or the current broker-dealers with which the recruits were associated, had obtained the customers’ consent to provide Raymond James with the customers’ nonpublic personal information or provided customers with notice of, and an opportunity to opt out of, the disclosure.

For its part, Raymond James explained, “No information was compromised in a way that would allow for illegal use. Raymond James has established a plan to address the issues raised by FINRA.”

In 2012, FINRA fined the firm $250,000 for Regulation S-P violations after it “inadvertently” disclosed client information to an “unapproved, nonaffiliated third-party.” 

— Check out Enforcement: SEC Unmasks Fund Manager’s Criminal Past; RIA Ordered to Hire CCO on ThinkAdvisor.


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