Raymond James and Robert W. Baird are under fire for compliance around trading away in their wrap programs.

Andrew Ceresney The Securities and Exchange Commission Director, Division of Enforcement

On Thursday the SEC unveiled settlements with the two broker-dealers. The regulatory agency claims that RayJay and Baird "failed to establish policies and procedures necessary to determine the amount of commissions their clients were being charged when sub-advisers 'traded away' with a broker-dealer outside the wrap fee programs." Under the settlements, Baird and RayJay neither admitted nor denied the charges, and they will each pay penalties ($600,000 for RayJay and $250,000 for Baird).

InvestmentNews picked up on the settlements.

The move comes less than two months after another SEC settlement over trading away within wrap programs. In July a big ETF strategist, RiverFront, settled with the regulatory agency over claims of inadequate disclosures of the firm's wrap program trading away practices.

This time, the SEC's concern centers on financial advisors' ability to gauge trading away costs when choosing wrap programs and subadvisors and on clients' unwittingly paying extra trading costs that they thought were already bundled in.

"Baird and Raymond James lacked policies and procedures to consider an entire category of cost information and didn't fully evaluate whether these wrap fee programs were a good fit for their clients," states Andrew Ceresney, director of the SEC's division of enforcement. 

Edited by: Neil Anderson, Managing Editor


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