Deals & People October 29, 2009

Raymond James Ups AUM Requirement for New RIAs

In an effort to attract higher-level advisers, Raymond James Financial Services’ Investment Advisors Division increased the minimum level of assets under management required for new affiliations with registered investment advisers (RIA).

Reported by

Effective October 1, the new requirement is $50 million, up from $30 million, the company said. Mike Di Girolamo, senior vice president and managing director of the division, said it benefits both the firm and its affiliates to limit access to advisers “at the top of the profession.”

“We have learned that breakaway advisers want to know who their peers will be and want only to work with those who are at least as successful or more,” said Di Girolamo. “It’s similar to a golf game—you only improve your game by playing with golfers who are at the top of theirs.”     

Advisers who do not meet the minimum asset level might be referred to an existing Raymond James office as an alternative, the company said.

“Our goal is to both keep and expand the relationships we have,” said Di Girolamo. “We know several advisers maintain more than one custodial affiliation—so by encouraging those below the minimum to increase their asset levels, we hope Raymond James becomes their primary custodian.”  

As an incentive, the firm re-introduced its Asset Builder Program, which will run for six months from October 15. Raymond James will absorb the transaction charges for the first three months or 30 trades (whichever comes first) of new accounts greater than $250,000. The promotion also absorbs up to $100 of transfer fees on new accounts valued at $500,000 and higher.

Compliance October 29, 2009

LPL Will Pay Victims of Montana Broker’s Ponzi Scheme

LPL Financial Corporation (LPL) has agreed to pay nearly $1.3 million in restitution to Montana investors in a Ponzi scheme run by an independent broker.

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Monica Lindeen, Montana’s commissioner of securities and insurance, also announced that LPL Financial will also pay a fine of $150,000 to the state of Montana.

The fine resolves the claims involving the alleged Ponzi scheme of Donald Chouinard, a former LPL registered representative in the Kalispell area. The state charged LPL for failing to supervise Chouinard.

“Too many hard working Montanans lost their savings due to the actions of Mr. Chouinard, but today we started the process of recovering those losses,” said Lindeen.

In September, the Securities Department issued a temporary cease and desist order against Chouinard and filed a notice of proposed agency action against him and his companies, DC Wealth Management, Inc., and DC Associates, Inc., according to Lindeen’s announcement.

The action alleges that Chouinard and his companies committed securities fraud and conducted a Ponzi scheme involving Montana and Idaho investors who invested in what they thought was a “day-trading” program. In fact, the investors received proceeds taken from money contributed by newer investors.

For instance, the department alleges Chouinard persuaded one investor to obtain a $100,000 loan, promising a high return in 30 days. Instead of investing the $100,000, Chouinard used $50,000 to pay off a previous investor, deposited $25,000 into his personal account, and paid the other $25,000 to his attorney.
     
Furthermore, Chouinard allegedly traded accounts without authorization and failed to provide the investors with statements or documents.

The state of Montana is continuing to pursue individual claims against Chouinard.

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