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Raymond James client sues over fee-based account

Kimberly Nguyen, who lives in a suburb of Dallas, is seeking class-action status for her lawsuit.
Raymond James Financial is based in St. Petersburg.
Raymond James Financial is based in St. Petersburg.
Published Feb. 7
Updated Feb. 7

TAMPA — A Texas woman is suing Raymond James Financial in federal court, claiming the St. Petersburg-based company persuaded her to put her money into a fee-based account that cost her more than she would have paid in a commission-based account.

Kimberly Nguyen of Garland, Texas, near Dallas, accuses Raymond James of “reverse churning.” That’s a practice of steering the money of clients who make relatively few trades out of commission-based accounts where a broker-dealer’s revenue is driven by the number of trades made and into fee-based accounts that pay the company a fixed percentage of the annual account balance no matter how many trades take place.

Nguyen’s attorneys also contend Raymond James "failed to have adequate processes and procedures in place to analyze accounts for suitability.”

As evidence they point to a $15 million settlement last September between Raymond James and the U.S. Securities and Exchange Commission. In that matter, federal regulators found, in part, that Raymond James did not consistently review accounts that had no trades for at least a year and thus improperly charged advisory fees on inactive accounts.

Nguyen’s lawsuit seeks damages and class-action status for Raymond James clients with similar fee-based accounts. A cover sheet filed with the case lists a demand amount of $50 million.

In a statement Friday, a Raymond James spokesman said Nguyen’s suit was without merit.

“Raymond James denies these allegations as untrue and is defending itself vigorously," Raymond James vice president for public communications Steve Hollister said in an email to the Tampa Bay Times.

“Specifically, we find the charge of ‘reverse-churning’ to be baseless and the reference to a separate, industry-related matter settled with the SEC as a transparent attempt to link two unrelated situations to gain a higher profile for this individual’s complaint,” Hollister said. "Raymond James has a strong commitment to placing clients’ interests first and will continue to focus on preserving that trust.”

The lawsuit, filed in U.S. District Court in Tampa late last month, describes Nguyen as a “buy and hold” investor who transferred an undisclosed amount into a Raymond James fee-based Freedom Account in early 2016 on the advice of her Raymond James financial adviser.

From 2016 to 2018, Nguyen paid more than $7,400 in fees on the account, which the suit contends was substantially more than she would have paid if her money had stayed in a commission-based account, but she received nothing of benefit from Raymond James.

Her attorneys wrote they believe there are potentially thousands or even tens of thousands of clients with similar accounts who could be members of the class.


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