Cetera Firms Fined $1 Million for Supervisory Failures in Third-Party Securities Transactions

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FINRA fined El Segundo, CA-based Cetera Advisors Networks, Cetera Advisors (Denver, CO), and Cetera Financial Specialists of Cetera Financial Group $1 million for failing it their supervisory responsibilities to properly oversee private securities transactions conducted by outside or unaffiliated registered investment advisors, and for continuing to fail to supervise the transactions despite knowing about these deficiencies.

Investigators also found that even when Cetera did review certain transactions, the reviews were not reasonable because they did not capture customer-specific information, including net worth or income, which would have been necessary to determine customer-specific suitability.

According to AWC #2015046716901, Cetera's misconduct spanned eight years—from 2011 through 2018—and that several times during this period, regulators informed Cetera's firms that they were out of compliance with supervisory duties, such as maintaining supervisory and recordkeeping controls, as well as implementing and enforcing written supervisory procedures.

For example, the SEC in 2013 issued findings plainly stating Cetera's supervisory failures pertaining to its dually-registered representatives business at outside registered investment advisors.

Nonetheless, FINRA's report states that Cetera Advisors did not begin receiving transaction data for these outside securities transactions until June 2018 and, thus, did not have adequate information with which to supervise outside transactions until 2018.

In addition to charging Cetera with failing to establish and implement supervisory procedures for outside transactions, FINRA cited the firms for failing to make and preserve books and records.

If you have invested with Cetera Advisors Network or another firm of the Cetera Financial Group whose inadequate supervision or reviews have proven harmful to your investments or interests, for instance due to a review that did not capture personal information such as net worth or income so as to form a basis for determining suitability, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.