WASHINGTON - A recent SEC civil fraud charge against a formerbroker with Raymond James Financial Services Inc. will not have animmediate impact on credit unions. The SEC has brought civil fraudcharges against Raymond James, a registered broker-dealer andinvestment adviser based on the conduct of one of its formerbrokers. According to the SEC, in 1999 and 2000, Dennis Herula andothers allegedly fraudulently solicited a number of investors todeposit approximately $44.5 million in a Raymond James brokerageaccount held in the name of Brite Business. Approximately $16.5million of the investor funds raised - most of which weresubsequently transferred to Herula's wife's brokerage account atRaymond James - were dissipated and never returned to investors,and Herula and his wife misappropriated approximately $8.7 millionof those funds, the SEC said. "Were there any credit unionsaffected - the simple answer is no," said John Dugan, SEC assistantdistrict administrator. "The case against Raymond James is based onone person. He did not have any credit union customers and themoney stolen was not credit union money." Dugan said if RaymondJames is ordered to pay back the money "there could be some effecton (its) business," which could impact credit unions. The caseshould be decided over the next year, he added. The SEC said J.Stephen Putnam, Raymond James' former president and CEO, and DavidUllom, Herula's former branch manager, "failed reasonably" tosupervise Herula. The SEC also alleges that Herula, acting in hiscapacity as a Raymond James registered representative, used RaymondJames' facilities and letterhead to carry out the scheme. "RaymondJames was aware at the highest levels that Herula was makingmisrepresentations to potential investors and yet failed to put astop to Herula's activities," said Stephen Cutler, director of theSEC's Division of Enforcement "Brokerage firms cannot turn a blindeye to the fraudulent activities of their employees and expect toavoid the consequences." The Commission previously brought fraudcharges against Herula and others in connection with the BriteBusiness scheme on April 1, 2002. A Rhode Island federal courtfroze Herula's assets and subsequently granted the Commission'srequest for a default judgment against Herula on Oct. 17, [email protected]