The Securities and Exchange Commission (SEC) on Wednesday charged Raymond James & Associates Inc. and Raymond James Financial Services Inc. with making inaccurate statements when selling auction rate securities (ARS) to customers.

Raymond James agreed to settle the SEC’s charges and allow its customers to sell back to the firm any ARS that they bought prior to the collapse of the ARS market in February 2008.

According to an article in Investment News, an online industry newsletter, Raymond James will offer to buy back $300 million in auction rate securities from clients and pay a fine of $1.7 million.  Raymond James has 30 days to extend an offer to repurchase the securities, and the offer must be open for 75 days after that initial bid.

 The states in charge of the settlement are Florida and Texas. Other states involved were Indiana, Missouri, New York, North Carolina, Pennsylvania and South Carolina.

According to the SEC’s administrative order, some registered representatives and financial advisers at Raymond James told customers that ARS were safe, liquid alternatives to money market funds and other cash-like investments. In fact, ARS were very different types of investments. Among other things, representatives at Raymond James did not provide customers with adequate and complete disclosures regarding the complexity and risks of ARS, including their dependence on successful auctions for liquidity.

“Raymond James improperly marketed and sold ARS to customers as safe and highly liquid alternatives to money market accounts and other short-term investments,” said Eric  Bustillo, director of the SEC’s Miami regional office. “Harmed investors who are covered by this settlement will have the opportunity to get full payment for their illiquid ARS.”

The SEC previously announced ARS settlements with Citigroup and UBS, Wachovia, Bank of America, RBC Capital Markets, Deutsche Bank and TD Ameritrade. As a result of those settlements, more than $67 billion has been returned to ARS purchasers following the SEC’s investigation into the ARS market collapse of February 2008 that left tens of thousands of investors holding ARS they could not sell.