The Financial Industry Regulatory Authority (FINRA) censured and fined Raymond James Financial Services (Raymond James) $400,000.00 for failing to implement procedures to detect suspicious transactions in the accounts of a customer who used the firm’s accounts to carry out a Ponzi scheme. The fraudulent scheme resulted in losses of approximately $17.8 million to the individual investors. Raymond James neither admitted nor denied the allegations in resolving the case.
Specifically, FINRA alleged that Raymond James failed to: (1) devote adequate resources to its anti-money laundering program, (2) adequately investigate suspicious activity in the customer’s accounts, and (3) conduct adequate due diligence or monitoring of the customer’s accounts.
This enforcement action by FINRA makes clear that securities broker-dealers have an obligation to vigilantly supervise and monitor customer account activity to detect and prevent fraudulent conduct, including Ponzi schemes. If a customer of a securities broker-dealer is utilizing the firm’s accounts to perpetuate an unlawful scheme on third-party investors (meaning the investors are not actual customers of the firm), the brokerage house may nonetheless be held legally responsible for their losses if it has failed to reasonably supervise and monitor.
If you have been victimized in a Ponzi scheme or other fraudulent scheme by an individual who utilized the accounts of a securities brokerage firm, you may have a legal basis to recover your losses.
