Cetera Fined by FINRA
From the Desk of Jim Eccleston at Eccleston Law LLC:
Cetera Advisor Networks LLC, Cetera Advisors LLC, and Cetera Financial Specialists LLC (collectively the “Cetera Firms”) agreed to pay a fine of $1 million to settle allegations made by FINRA Enforcement. According to FINRA Enforcement, the Cetera firms failed to establish, maintain and enforce a supervisory system and written supervisory procedures for private securities transactions conducted by dually registered advisors at unaffiliated RIAs.
According to a Letter of Acceptance, Waiver and Consent (“AWC”) signed by the Cetera Firms, the Cetera Firms were obligated to supervise the private securities transactions of dually-registered representatives. However, FINRA found that the Cetera Firms either had no specific procedures on how to conduct reviews of such private securities transactions, or did not have the data necessary to conduct a reasonable supervisory review. For Cetera Financial Specialists, FINRA found that supervisory reviews of some private securities transactions did not occur until up to 13 months after the transaction occurred.
According to the AWC, the supervisory failures began in January 2011 for Cetera Advisor Networks and Cetera Advisors, and November 2012 for Cetera Financial Specialists. FINRA Enforcement found that the supervisory failures continued until January 2018 for Cetera Financial Specialists and December 2018 for Cetera Advisor Networks and Cetera Advisors. According to FINRA, the Cetera Firms were aware of the supervisory deficiencies as early as 2013 but failed to implement appropriate systems.
Of the $1 million fine, $750,000 is allocated to Cetera Advisor Networks, $150,000 is allocated to Cetera Advisors, and $100,000 is allocated to Cetera Financial Specialists. The Cetera Firms are also required to certify in writing to FINRA that they have established and implemented supervisory systems, policies and procedures that are reasonably designed to ensure compliance with FINRA rules. By signing the AWC, the Cetera Firms accepted and consented to the entry of FINRA’s findings without admitting or denying those findings.
Tags: eccleston, eccleston law, cetera, fines, finra