Raymond James Could Be Hurt By Auction Rate Securities

Fallout from the sale of auction rate securities could hurt Raymond James Financial Inc., the company said in a regulatory filing.

Raymond James lacks the funding to buy back the securities it sold and if it had to do so, it could incur a loss, the company said in its annual report filed Friday with the Securities and Exchange Commission

Raymond James (NYSE: RJF), a financial services firm headquartered in St. Petersburg, is among a number of firms that sold the securities, which became nearly impossible to trade amid a worsening capital crunch.

The company has been named in a class action lawsuit similar to those filed against other brokerage firms, alleging securities violations. It is vigorously defending itself in the lawsuit and also cooperating with probes by the SEC, the New York Attorney General’s Office and the Florida Office of Financial Regulation, the filing said.

Raymond James is working with others in the industry to actively seek a solution to the securities’ illiquidity, including restructuring and refinancing the securities, which has met with some success, the filing said.

But the restructurings and refinancing could further cut clients’ holdings, the filing said.