Commonwealth Financial Network Resolves SEC Conflict of Interest Case
From the desk of Jim Eccleston at Eccleston Law
Commonwealth Financial Network has agreed to pay $5 million to resolve a long-standing conflict of interest case brought by the Securities and Exchange Commission, according to reporting by ThinkAdvisor.
The firm reached the settlement without admitting or denying the allegations, as reflected in a proposed final judgment filed in the U.S. District Court in Massachusetts.
The dispute stems from a 2019 SEC enforcement action alleging that Commonwealth breached its fiduciary duty to advisory clients between July 2014 and December 2018. According to ThinkAdvisor, the SEC claimed that the firm failed to disclose conflicts of interest tied to a revenue-sharing arrangement with National Financial Services.
The SEC alleged that certain mutual fund share classes generated substantial revenue-sharing payments for Commonwealth, while lower-cost alternatives for clients produced little or no additional revenue. Regulators contended that Commonwealth did not adequately disclose these financial incentives to clients.
The case previously resulted in a significant court-ordered judgment. In March 2024, a federal court ordered Commonwealth to pay $93 million, which included $65.6 million in disgorgement, $21.2 million in interest, and a $6.5 million civil penalty.
However, ThinkAdvisor reports that a federal appeals court overturned that judgment in April 2025 and remanded the case for further proceedings. The appellate court determined that the judgment was invalid because a jury needed to decide whether the alleged disclosure omissions were material.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec enforcement, conflict of interest, commonwealth financial network, securities law
