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NEWSLETTERS & ALERTS
FINRA ‘Mutual Fund Waiver Sweep’ – Part 2
by Howard Haykin
As it turns out, the independent broker-dealers of Cetera Financial Group were “Leaders of the Pack” in FINRA’s Mutual Fund Waiver Sweep. Seven (7) of the twelve (12) firms sanctioned by FINRA to date in 2017 are or were affiliates of Cetera. All told, these firms were hit with combined sanctions totaling just under $7.2 million in restitution – $8.1 million, including pre-judgment interest. Wonder what was in their water!
- Legend Equities Corporation ($2.08Mn in Restitution)
- Cetera Advisor Networks ($1.67Mn)
- Cetera Advisors ($553K)
- Cetera Financial Specialists ($502K)
- Cetera Investment Services ($1.22Mn)
- First Allied Securities ($769K)
- Girard Securities ($90K)
- Summit Brokerage Securities ($313K)
ABOUT CETERA FINANCIAL GROUP. Cetera Financial Group is a leading network of independent retail broker-dealers empowering the delivery of objective financial advice to individuals, families and company retirement plans across the country through trusted financial advisors and financial institutions. The indie broker-dealer network includes, the following: Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied Securities, Girard Securities, and Summit Brokerage Services. Legend Equities Corporation had been a member of Cetera Financial Group, until September 2016, when Legend was divested from First Allied Holdings, a Cetera affiliate, to Lincoln Investment Capital Holdings. Terms of the deal were not disclosed.
FINRA FINDINGS. From 2009 to 2017, each of these firms apparently disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. 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.
Legend Equities Corp. (AWC #2016050259801) - an estimated $2.3 million in restitution and interest. Legend, based in Palm Beach Gardens, FL, had been a FINRA member since 1993. It had a sales force of more than 540 registered reps who operated out of more than 170 branch offices. [for further details, click on Financialish, July 12]
Cetera Advisor Networks (AWC #2016050258801) – an estimated $1.9Mn in restitution and interest. CAN, based in El Segundo, CA, has been a FINRA member since 1983. It has a sales force of 3,100 registered persons who operate out of 1,225 branch offices.
Cetera Advisors (AWC #2016050259001) – an estimated $628K in restitution and interest. CAN, based in Denver, CO, has been a FINRA member since 1982. It has a sales force of 1,788 registered persons who operate out of 961 branch offices.
Cetera Financial Specialists (AWC #2016050259101) – an estimated $572K in restitution and interest. CFS, based Schaumburg, IL, has been a FINRA member since 1982. It has a sales force of 1,522 registered persons who operate out of 961 branch offices.
Cetera Investment Services (AWC #2016050259201) – an estimated $1.4Mn in restitution and interest. CIS, based St. Cloud, MN, has been a FINRA member since 1984. It has a sales force of 1,792 registered persons who operate out of 1,309 branch offices.
First Allied Securities (AWC #2016050259301) – an estimated $877K in restitution and interest. FAS, based San Diego, CA, has been a FINRA member since 1994. It has a sales force of 1,095 registered persons who operate out of 465 branch offices.
Girard Securities (AWC #2016050259401) – an estimated $103K in restitution and interest. Girard, based San Diego, CA, has been a FINRA member since 1988. It has a sales force of 478 registered persons who operate out of 139 branch offices.
Summit Brokerage Services (AWC # 2016050260001) – an estimated $357K in restitution and interest. Summit, based Boca Raton, FL, has been a FINRA member since 1994. It has a sales force of 810 registered persons who operate out of 378 branch offices.
These cases were reported in FINRA Disciplinary Actions for June, July, or October 2017.
For details on any case, go to ... FINRA Disciplinary Actions Online, and refer to the respective AWC Number.