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Raymond James Brokerage Unit Profits Plunge

April 27, 2017

Raymond James’ brokerage arm reported healthy growth in revenue and assets in the first three months of 2017. But a legal settlement reached earlier this month pushed its profits down by 65% year-on-year, according to the company’s quarterly earnings report.

Net revenue in Raymond James’ Private Client Group reached a record $1.09 billion in its fiscal second quarter ending March 31. That’s 23% higher than the same quarter last year, the company says. The group’s 7,000 advisors oversaw $642.7 million as of the end of the quarter, a 25% rise from the same quarter last year. And fee-based assets grew to $260.5 billion, a 33% rise year over year. Paul Reilly, Raymond James Financial’s chairman and CEO, attributes the record assets to successful broker recruiting and retention. In 2017, Raymond James has nabbed several top-producing brokers from rivals, including Merrill Lynch, Morgan Stanley and Wells Fargo Advisors.

But the unit’s pre-tax income was $29.4 million — a 65% drop from the year before. Raymond James attributes the hit to a $150 million legal settlement, according to its earnings report.

The firm used $100 million in legal reserves at its brokerage to cover the tab, according to the report. The settlement related to a former Raymond James worker tied to an alleged fraudulent investment scheme in financing the Jay Peak ski resort in Vermont, the Wall Street Journal writes. The firm didn’t admit wrongdoing, according to the paper.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.