Regulators Charge Brokerage Firm Raymond James

By REUTERS, September 30, 2004

WASHINGTON - The U.S. Securities and Exchange  Commission on Thursday charged brokerage firm  Raymond James Financial Inc. with fraud over  the misconduct of a former broker in 1999  and 2000.

The SEC said it also brought additional charges  against the St. Petersburg, Florida-based  firm; a former president, Stephen Putnam;  and a former branch manager, David Ullom,  for failing to properly supervise the activities  of former broker Dennis Herula.

Raymond James Chief Executive Richard Averitt  said the firm believes the fraud charge against  the firm is "wholly unjustified.'' Putnam's  attorney, Jerry Isenberg, said through the  firm's media statement that he and his client  "strongly disagree'' with the SEC's assertions  and that Putnam "fully complied'' with  his supervisory responsibilities and will  fight the SEC's allegations.

An attorney representing Ullom could not  be reached immediately for comment.

The SEC has accused Herula of participating  in a scheme with others that raised about  $44.5 million from investors. Herula raised  about $16.5 million of investor funds, most  of which was later transferred to his wife's  brokerage account at Raymond James, the SEC  said, adding that the money was never returned  to investments.

The SEC said Putnam and Ullom were aware  of Herula's activities involving a "suspicious''  business venture using Raymond James's letterhead  but failed to stop him.

"Raymond James was aware at the highest  levels that Herula was making misrepresentations  to potential investors and yet failed to put  a stop to Herula's activities,'' SEC enforcement  chief Stephen Cutler said.

Raymond James Financial shares were up 22  cents at $23.99 in trading on the New York  Stock Exchange.

In May 2003, federal agents arrested Herula  in Boston, where he was staying under an assumed  name. He was arrested on a warrant in connection  with a criminal indictment obtained by the  U.S. Attorney's Office in Colorado. The indictment  charged he participated in a fraudulent investment  scheme.

In October 2002, in one of two civil fraud  enforcement actions brought by the SEC, Herula  was permanently enjoined from future violations  of U.S. securities laws and ordered to pay  $19 million. As part of that action, a Rhode  Island federal court froze his assets.

In January 2003, an arrest warrant was issued  in Providence, Rhode Island, after Herula  failed to participate in a bankruptcy proceeding  resulting from the order to pay $19 million.

The SEC filed a second civil action in July  2002 against him and others in federal court  in San Francisco, accusing him of participating  in another scheme to defraud investors.

On May 29, 2003, a federal magistrate ordered  Herula to be transferred to Colorado to face  charges where a magistrate said he was a flight  risk and ordered him detained pending the  outcome of criminal charges there.

The SEC said in Thursday's announcement  that a hearing will be held before an administrative  law judge. The SEC did not announce a date  for the hearing.

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