A rep who was allegedly churning annuity sales in at least one elderly client's account has cost Raymond James $1.7 million for failing to supervise him, even though he's no longer their affiliate.
Paul Davis, the advisor, is based in Amarillo, Texas. Early last decade, he reportedly shifted a $3.8 million client's portfolio out of muni bonds and into annuities.
So far so good, but then he seems to have sold those annuities and bought an entirely different set of contracts.
At the time, the clients made a lot of money -- a full $800,000 -- on the various transactions, so they were happy to stick with Davis when he himself moved to LPL from Raymond James in 2006.
During his tenure at LPL, however, the market shifted and Davis kept trading, using the annuities as collateral and leaving the clients with $2 million in liens on the contracts.
FINRA found that Raymond James "did nothing to inject itself" into what must have looked like unsuitable trades during Davis's time there. The firm now owes $1.7 million in fines.
LPL settled separately and quietly. Raymond James is not happy and is considering its options.