Cetera Financial Group Settles with FINRA
According to reports, five Cetera Financial Group broker-dealers reached settlements with the Financial Industry Regulatory Authority totaling $3.3 million for failing to supervise the application of mutual fund sales charge waivers to eligible clients in retirement plans and at charitable organizations.
Over an eight-year period, from July 2009 until July 2017, the B-Ds allegedly failed to properly supervise sales charge waivers to clients in retirement plans and charitable organizations.
According to FINRA, the five broker-dealers neither admitted nor denied the allegations. The five firms are: Cetera Investment Services, Cetera Financial Specialists, First Allied Securities Inc., Summit Brokerage Services Inc., and Girard Securities Inc., under another firm in the network, Cetera Advisor Network.
Each of the five settlements accounts for the amount that eligible clients were overcharged for the mutual fund purchases, plus interest, according to reports.
FINRA’s “Mutual Fund Waiver Sweep”
Earlier this year, FINRA posted a notice on its website declaring a mutual fund waiver sweep, for which the regulator requested documents and information from broker-dealers related to waivers, or reimbursements, that were available to some investors for mutual fund sales charges.
According to each of the settlements, “These eligible customers were instead sold class A shares with a front-end sales charge or class B or C shares with back-end sales charges and higher ongoing fees and expenses.
The broker-dealers “disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase A shares in certain mutual funds without a front -end sales charge,” according to FINRA.
Failure to Supervise Application of Sales Charge Waivers
FINRA claims that in the past eight years, the Cetera firms failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales. Further, the firm reportedly relied on its financial advisers to determine the applicability of sale charge waivers, but purportedly failed to maintain adequate written policies or procedures to assist financial advisers in making this determination, according to FINRA.
The settlement states that Cetera Investment Services will pay $1.4 million in restitution to clients, while Cetera Financial Specialists will pay $572,000. First Allied and Summit Brokerage Services, respectively, will pay $877,000 and $357,000. Girard Securities will pay $103,000.
This information, which is publicly available on FINRA’s website, has been provided by The White Law Group.
If you have questions about investments you made with Cetera Financial Group, the securities attorneys of The White Law Group may be able to help you. To speak with a securities attorney, please call 888-637-5510.
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