UPDATE 2-Panel rules Raymond James must buy back securities

* Repurchase will total $2.5 million

* Bought by investor from Oct. 2006 through Feb. 2008

* Investor alleged company did not disclose risks
(Adds Raymond James statement)

CHARLOTTE, N.C., July 26 (BestGrowthStock) – Raymond James
Financial Inc (RJF.N: ) must repurchase $2.5 million in auction-
rate securities from an investor, according to an arbitration
ruling made public on Monday.

The St. Petersburg, Florida-based brokerage must repurchase
auction-rate securities bought by Greg Merdinger between
October 2006 and February 2008, the panel ruled on July 19,
according to the filing.

For years brokerages sold “auction rate securities,”
long-term debt that could be sold weekly or monthly through
auctions, as high yielding, cash-like investments. But the 2008
collapse of credit markets shut down the auctions and left
customers stuck with securities they could not sell.

Brokerages have been flooded with customer complaints and
regulators seeking the repurchase of the securities.

Merdinger’s complaint filed with the Financial Industry
Regulatory Authority, or FINRA, on June 8 last year alleged
Raymond James failed to warn him of the risks inherent in
purchasing auction-rate securities.

Merdinger alleged Raymond James steered him away from money
market funds and advised him to buy additional securities just
a month before the markets collapsed, the filing said.

Raymond James denied the allegations. The company also
countered in the filing that it did not serve as a fiduciary
for Merdinger and that he was aware of the risks.

“This split-decision (2-1) by the FINRA arbitration panel
was issued without explanation and it is impossible to
determine the basis for the panel’s decision or what evidence
they considered,” Paul Matecki, general counsel for Raymond
James, said in a statement e-mailed to Reuters on Monday.

Raymond James said it showed the panel it was not aware of
the impending failure of the auction-rates market prior to
February 2008 and there was no evidence any employee had
knowledge this market would fail.

Matecki observed Merdinger did not receive all damages
requested and was denied punitive damages and attorneys’ fees.

Stock Market News

(Reporting by Joe Rauch; editing by Andre Grenon)

UPDATE 2-Panel rules Raymond James must buy back securities