Earlier this week, Finra fined Cetera Financial Group broker-dealers $1 million for failing to supervise various private securities transactions made by dually registered representatives at unaffiliated, outside registered investments advisers.
On Tuesday, FINRA reached a settlement in the case with Cetera, which stretches all the way back to 2011. The action was focused on three frims: Cetera Advisors, Cetera Advisor Networks, and Cetera Financial Specialists.
From January 2011 through December 2018, Cetera Advisor Networks and Cetera Advisors, and from November 2012 through January 2018, Cetera Financial Specialists all failed to establish, maintain and enforce a supervisory system and written supervisory procedures designed to supervise certain private securities transactions conducted by their dually-registered representatives at outside RIAs.
“The Cetera firms were aware of the supervisory deficiencies — they were identified in Securities and Exchange Commission examinations in July 2013, August 2015 and September 2017 — yet, despite several efforts to address such deficiencies, failed to implement systems and procedures to reasonably supervise the transactions,” according to the settlement.
As part of the settlement, Cetera’s firms neither admitted or denied Finra’s findings. They will have to review and revise, as necessary, their systems, policies and procedures with respect to the supervision of their dually-registered advisors' securities transactions.
The total fine was allocated as follows: a $750,000 fine for Cetera Advisor Networks LLC, a $150,000 fine for Cetera Advisors LLC, and a $100,000 fine for Cetera Financial Specialists LLC.
Cetera is a network of six broker-dealers and 8,000 financial advisors, which was acquired by private equity manager Genstar Capita in 2018.
