Raymond James Financial announced record quarterly net revenue of $1.1 billion in its private client group, up 23 percent over the prior year quarter. Yet, the unit’s pre-tax income in the fiscal second quarter fell 65 percent year-over-year to $29.4 million, negatively impacted by a $150 million legal settlement during the quarter.
The settlement involved an alleged fraudulent EB-5 investment program created in 2007 by third parties. It was offered directly to foreign investors seeking permanent residence in the U.S.
“Raymond James did not act as a placement agent or in any other capacity for the program, and none of the investors in the program purchased their investments through Raymond James,” Chairman and CEO Paul Reilly said on a conference call Thursday morning.
Since 2007, the firm has made significant enhancements to its supervision and anti-money laundering infrastructure, including hiring a new chief AML officer, growing the AML team and implementing a new AML technology system — the same one used by some of the largest banks in the world, Reilly said.
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