Commission By Stealth? In a Raymond James Ruling, a Federal Court May Have Opened the Door
October 30, 2018 by Miriam Rozen
When can financial advisors call a commission something else and have clients pay it?
“Never,” is the short answer.
“I believe that most firms understand that commissions must be clearly identified as such,” says Brad Bennett, the former chief of enforcement at Finra, who is now a law partner at Baker Botts in Washington, D.C.
A ruling this month by a federal judge in Florida granting class certification to nearly 50,000 Raymond James clients, however, may open the door for a more nuanced answer to that question.
The judge granted the certification after a named plaintiff, Jyll Brink, made breach-of-contract and negligence claims based on allegations that Raymond James required Brink and the other holders of its ostensibly commission-free “Passport Investment Accounts” to pay fees. RJA labeled those fees as “processing fees.”