FINRA Fines Cetera Financial Specialists $200,000 for Failing to Supervise Alleged Wayward Rep
The Financial Industry Regulatory Authority has fined Cetera Financial Specialists LLC $200,000 for failing to supervise the outside business activities of one of its registered representatives who allegedly stole more than $75,000 from his elderly client after he was granted power of attorney over their account.
The Financial Industry Regulatory Authority has fined Cetera Financial Specialists LLC $200,000 for failing to supervise the outside business activities of one of its registered representatives who allegedly stole more than $75,000 from his elderly client after he was granted power of attorney over their account. Cetera Financial Specialists is one of six broker-dealers affiliated with the Cetera Financial Group network.
Alex P. Anderson held power of attorney over the accounts of two senior customers, a 94-year-old woman and her 75-year-old son-in-law, and could withdraw funds from their accounts. FINRA claims that he withdrew at least $75,500 from one client’s bank account for his own use.
According to FINRA, Anderson disclosed his power-of-attorney to the broker-dealer on three occasions between 2012 and 2014, claiming that he was providing “assistance with all financial matters including but not limited to taxes, investments, bill paying, bookkeeping and real estate matters,” both in accounts at Cetera Financial Specialists and elsewhere.
Cetera Financial Specialists’ written supervisory procedures prohibited registered representatives from acting in a fiduciary capacity for a non-family member customer’s account without approval from their compliance department.
In addition, the firm’s procedures required designated supervisors to review outside business activity requests for potential conflicts. However, FINRA claims that the broker-dealer did not timely review, evaluate or respond to Anderson’s disclosures.
Specifically, Cetera Financial Specialists did not begin reviewing his transactions until a mutual fund issuer detected that some appeared questionable and alerted the broker-dealer.
FINRA also claims that the firm “unreasonably” decided to postpone its review of approximately 200 other disclosures from reps for at least 13 months while it re-evaluated its policies for approving its reps’ requests to act in a fiduciary capacity for non-family members. The broker-dealer has since enhanced those policies, said FINRA.
In December 2014, Cetera Financial Specialists terminated Anderson’s registration after 10 years with the firm over concerns of questionable bank withdrawals and his refusal to cooperate with their review. In April 2015, he was barred by the regulators over the allegations.
Cetera Financial Specialists agreed to a censure and $200,000 fine.
Cetera Financial Specialists is headquartered in Schaumburg, Illinois and has approximately 1,7400 advisors and maintains 934 branch offices. The company has no relevant disciplinary history with the Securities and Exchange Commission, any state securities agency, FINRA, or any other self-regulatory organization.
