The Financial Industry Regulatory Authority has fined a former Raymond James rep $20,000 and suspended him for six months for converting 13 fee-based advisory accounts into commission-based brokerage accounts and executing trades without informing the clients of material facts related to the conversions and trades.
Between March 25 and March 27, 2024, Paul D. Snow IV failed to inform the customers of material facts related to the account conversions and trades, which generated $30,201.52 in commissions, FINRA's order states. During the same period, Snow also exercised discretion without written authorization in violation of FINRA Rules 3260(b) and 2010.
In April 2002, Snow registered with FINRA as a general securities rep with Raymond James Financial Services, Inc., and then became a general securities principal in November 2022.
Snow's BrokerCheck profile shows that he was with Raymond James in Covington, Louisiana, from April 2002 to April 2024. Before that, he was with Morgan Keegan in Memphis, Tennessee, starting in February 1998.
On April 18, 2024, Raymond James filed a Form U5 disclosing that Snow voluntarily terminated his registrations. The Form U5 also disclosed that, at the time of his resignation, the firm was conducting an internal review to determine if Snow violated "firm client standard of care policies."
"At various times prior to March 2024, 11 of Snow's customers informed him that they wanted to liquidate their Raymond James fee-based advisory accounts," the order states. "Snow incorrectly believed that Raymond James's policies prohibited him from executing unsolicited sales in advisory accounts."
Between March 25 and March 27, 2024, Snow converted 13 advisory accounts owned by these customers into commission-based brokerage accounts, the order continues.
"Snow did not tell his customers that he was converting their accounts from advisory to brokerage to effect the transactions they requested, nor did he discuss with them the differences between these account types, including that transactions in brokerage accounts, unlike those in advisory accounts, would result in commission charges," FINRA said.
"Snow sold his customers' positions shortly after he converted these accounts, and those sales generated $30,201.52 in commissions, which his customers would not have been charged had Snow executed the transactions in their advisory accounts," according to the order.
By failing to provide his customers with complete and accurate information, Snow prevented them from understanding the effects of the account conversions and subsequent trades.
On March 28, 2024, Raymond James identified Snow's conversion of advisory accounts to brokerage accounts and the subsequent liquidations.
On April 3, 2024, the firm reversed the transactions in the brokerage accounts, "such that Snow's customers did not pay any unnecessary sales charges, and Snow did not earn any commissions," according to the order.
After Snow converted the 13 advisory accounts to brokerage accounts, "Snow sold his customers' positions through 282 trades he placed in their brokerage accounts, without first speaking to the customers on the trade dates," the order continues.
"Although the customers understood that Snow would be placing trades on their behalf, Snow failed to obtain prior written authorization from the customers to exercise discretion in their brokerage accounts. Raymond James did not accept any of the accounts as discretionary," FINRA said.
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