Cambridge to Pay $3.5 Million In Restitution To Settle FINRA Mutual Fund Case

Posted on April 13th, 2021 at 9:22 AM
Cambridge to Pay $3.5 Million In Restitution To Settle FINRA Mutual Fund Case

From the Desk of Jim Eccleston at Eccleston Law LLC:

Cambridge Investment Research failed to supervise the recommendations of a mutual fund by its 4,400 financial advisors in 2,500 offices, according to a settlement agreement (Acceptance, Waiver and Consent or “AWC”) filed with the Financial Industry Regulatory Authority (FINRA). 

According to Cambridge’s settlement with FINRA, a financial advisor of Cambridge Investment Research sold more than 80 percent of the shares in the LJM Preservation & Growth Fund. Unfortunately for customers,  “volmageddon” of February 2018 brought a record point decline in the Dow that wiped out 98 percent of the fund’s assets. 

FINRA investigators noted that the firm sold shares to 550 customers. FINRA  also stated, “Cambridge did not adequately train the advisors in alternative mutual funds or design due diligence and suitability reviews.” 

Cambridge allowed the sale of LJM on its platform without conducting reasonable due diligence and without a sufficient understanding of its risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options, according to FINRA. The settlement requires Cambridge to pay a fine of $400,000 and restitution of $3.13 million while revising its procedures. 

Eccleston Law LLC represents investors and financial advisors nationwide. Please contact us to discuss any issues that you may have.

 

Tags: eccleston, eccleston law, cambridge investment research, finra, restitution

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