© 2020 Arizent. All rights reserved.

$150M legal settlement dents Raymond James earnings

Register now

Pretax profits for Raymond James' Private Client Group plunged 65% year-over-year, suffering under the fallout of a previously announced $150 million legal settlement, the firm said.

It was otherwise a strong quarter for the firm, which reported rising adviser headcount, record quarterly net revenue and assets under administration for the wealth management unit.

The year-over-year pretax profit drop to $29 million from $83 million was largely attributed to higher legal bills in the company’s announcement Tuesday.

The settlement with an SEC receiver resolved allegations that Raymond James had, through lax oversight, enabled a Vermont ski resort owner to defraud immigrant investors of more than $200 million.

That also comes after Raymond James incurred tens of millions of regulatory penalties last year. FINRA fined the firm $17 million for systemic failures in its anti-money laundering programs in May 2016. One month later, Raymond James agreed to pay nearly $6 million to Vermont securities regulators to settle charges that investments related to the same Vermont ski resort, Jay Peak, violated state laws.


The St. Petersburg, Florida-based firm has kept up its recruiting momentum. Headcount climbed to 7,222 independent and employee advisers from 7,128 for the prior quarter. The firm's independent channel notched the strongest growth, with headcount ticking up 78.

The Private Client Group's assets grew to $611 billion from $485.6 billion for the year-ago period, a 26% increase. It was up 4% from the prior quarter.

The unit's fee-based assets also notched impressive growth, increasing to $260 billion from $196 billion, a 33% year-over-year increase.

CEO Paul Reilly credited the firm's recruiting efforts for the asset growth.

"The records we achieved for client assets under administration, financial assets under management and loan balances at RJ Bank should position us well for the second half of the fiscal year," he said in a statement.

Companywide, Raymond James' total revenues rose 23% to $1.6 billion, boosted by strong growth in securities commissions and fees as well as investment banking. Noninterest expenses, meanwhile, soared 25% to $1.4 billion. The fastest growing line item was "other," which mushroomed 265% to $163 million.

For reprint and licensing requests for this article, click here.