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SEC Charges Broker-Dealer with Failure to Supervise Registered Representative Who Defrauded Two Senior Citizen Customers

Sept. 22, 2022

FILE NO. 3-21133

September 22, 2022-The Securities and Exchange Commission today announced settled charges against Raymond James & Associates, Inc., a registered broker-dealer, for failing to supervise former registered representative Frederick M. Stow, who systematically misappropriated $901,500 from two elderly customers from October 2015 through April 2019. The Commission filed a related action against Stow in June 2020, and accepted his offer of settlement in July 2021.

According to the SEC's Order, in June 2018, supervisors referred concerns about Stow's management of an elderly customer's accounts to Raymond James' Senior-and-at-Risk-Clients group ("SARC"), which had been formed in late 2017 to respond primarily to potential external threats of financial exploitation. The Order alleges that after SARC declined to take action, the supervisors did not investigate the concerns further due to a lack of clear communication from the firm about the scope of SARC's investigation, and the process for next steps after SARC's work. Consequently, Stow was able to misappropriate an additional $148,000 until he confessed his fraud in May 2019.

The Order finds that Raymond James failed to develop policies and procedures reasonably designed to communicate clearly to supervisory and compliance staff SARC's process or the scope of SARC's work in supporting supervisors, and charges Raymond James with failing reasonably to supervise Stow within the meaning of Section 15(b)(4)(E) of the Securities Exchange Act of 1934 ("Exchange Act") with a view to preventing and detecting his violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder from July 2018 through April 2019. Without admitting or denying the SEC's findings, Raymond James consented to a censure and agreed to pay a penalty of $500,000.

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