What does SEC Judge Murray have to gain from Raymond James?

An article appearing in the St. Petersburg Times (Florida) on Friday, September 18 relates that SEC Chief Administrative Law Judge Brenda Murray has fined Raymond James Financial Services (RJ) with a $6.9 million fine for the fraudulent actions of one of its brokers. The broker, Dennis Herula, is now in federal prison.

There are a few things that bother me about this story, especially since we're supposedly getting tougher on securities fraud. After reading the article, I came away with the feeling that RJ merely got a slap on the hand. Although Judge Murray is imposing 'one of the largest fines handed down by an SEC judge,' it's noted that "brokerages have agreed to much larger fines in cases settled without judicial proceedings." Yet, Judge Murray feels that this 'strong' penalty could (not will, or should) "serve as a deterrent to future wrongdoing." So RJ is fined less than what they might have had to pay out had they NOT gone to court, and Judge Murray gets to hold them up as an example of how tough the SEC is getting. Additionally, Judge Murray seems to contradict herself a number of times. She cites a "serious lack of supervision" on RJ's part and "willful violations of the securities law," leading to "large-scale fraud" as carried out by Herula, despite many 'red flags.' She also disagreed with RJ's claims that their standards are higher than those of many other broker-dealers. HOWEVER, she somehow concludes, "the violations did not reflect the corporate culture at RJ and were not likely to be repeated." I'd LOVE to know how she reached those conclusions. Murray further rejected an SEC lawyer's proposal to bar RJ from hiring brokers or opening new offices "until the company has made supervisory improvements recommended by an outside consultant." Now that sounds like a good idea to me. I wonder what she didn't like about it. Such a requirement would put some pressure on RJ to stay on their toes. Murray is quoted as saying that "Raymond James had serious problems with supervision during the relevant period," and she is aware that RJ's president, Stephen Putnam, knew of Herula's unauthorized correspondence to investors (on RJ letterhead) but took nine months to fire him. Yet, for some reason, she concludes, "the risk of future violations is slight," even though no corrective measures have been taken by or imposed upon Raymond James, other than some fines and penalties which, as RJ states, "would not materially affect its financial results." As I said, a mere slap on the hand. Something just doesn't sound right to me about this whole story and I will be watching for updates to it.

Not mentioned in the above-referenced article, SEC vs. Dennis Herula, et al also names David L. Ullom as a relief defendant and states that Ullom "served as Herula's [immediate] supervisor at Raymond James [Rhode Island] and received approximately $190,000 in Brite Business investor funds." I'm assuming Ullom was 'let go' when Herula was exposed.