FINRA Fines Three Cetera Firms for “Supervisory Deficiencies”
The Financial Industry Regulatory Authority has fined three firms within the Cetera network a total of $1 million for failing to supervise certain private securities transactions conducted by their dually-registered representatives.
The Financial Industry Regulatory Authority has fined three firms within the Cetera network a total of $1 million for failing to supervise certain private securities transactions conducted by their dually-registered representatives who were associated with outside registered investments advisors.
The $1 million 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.
FINRA said that the violations occurred between January 2011 through December 2018. By early 2018, the 535 dually-registered representatives managed more than $80 billion in customer assets across more than 47,000 accounts.
“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,” FINRA stated in its letter of acceptance, waiver, and consent.
FINRA indicated that the three Cetera firms, led by Cetera Advisor Networks, initiated a project back in May 2014 to obtain the information necessary to supervise outside RIA transactions for dually registered reps. However, according to FINRA, the project was not completed, and the automated system for a transaction review was not implemented.
The Cetera firms agreed to the censures and fines, and must review and revise their systems, policies and procedures relating to the supervision of DRR securities transactions.
