The Oregon Division of Financial Regulation issued $220,000 in civil penalties, and Raymond James Financial Services, Inc. agreed to pay $123,279 in restitution to the victims of the excessive trading practices of Gary Dodds.
Dodds, a stock broker for Raymond James Financial Services, conducted churning, a method of excessive trading to receive additional commissions, on several of his clients’ accounts from 2016 to 2018, according to court documents.
The division’s investigation revealed Dodds made unsuitable recommendations and sales of securities for his clients and failed to maintain proper documentation of his trading activities, Oregon officials said in a news release. The division also learned that Raymond James Financial Services was aware of his actions, but did not take adequate corrective steps.
Under Oregon law, securities professionals can be held liable for financial exploitation of vulnerable people and investment firms are expected to supervise their representatives to prevent churning and similar violations.
The division issued a cease-and-desist order, and assessed civil penalties of $100,000 against Dodds. As part of the order, Dodds agreed to not apply for any financial services license or registration in Oregon for five years. A civil penalty of $120,000 was also assessed against Raymond James Financial Services, and the company agreed to provide restitution to five Bend-area seniors totaling $123,379.
According to court documents, Dodds executed 103 trades for his 92-year-old client, earning more than $35,000 in commissions. He executed dozens of other trades on the accounts of his four other clients, ages 72, 87, 89 and 89.
Instead of focusing on income for his older clients, Dodds instead invested for growth, and higher commissioners, court documents said. His strategy ultimately ran afoul of suitability standards.
“Securities and financial professionals first concern should be the customer, not the commission,” said Division of Financial Regulation Administrator TK Keen. “Investment firms also have a duty to supervise advisors in a way that prevents churning, excessive trading, and other violations of Oregon law.”