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

Return to Archive



If you find yourself in trouble with the regulators, call Eccleston Law, you won't regret it.

Rick R.


February 22, 2024
Key Considerations for Advisors When Assessing the Financial Soundness of Annuities

While rating agencies like Fitch and S&P Global Ratings generally highlight the strength of annuity issuers, advisors still should scrutinize certain factors in their assessment process.

February 21, 2024
SEC Alleges Fraud Against Morgan Stanley and Former Executive in Block Trading Business

As reported by the Wall Street Journal, the Securities and Exchange Commission (SEC) has charged Morgan Stanley & Co. LLC and its former head of equity syndicate desk, Pawan Passi, with a multi-year fraud involving the disclosure of confidential information related to block trades.

February 20, 2024
Challenges Persist: Firms Struggle to Comply with Regulation Best Interest

FINRA's annual report for 2024 reveals a concerning trend among broker-dealers, with numerous instances of violations of Regulation Best Interest (Reg BI).