SEC Obtains Final Judgement Against Cetera Advisors and Cetera Advisor Networks for Defrauding Advisory Clients
The Securities and Exchange Commission obtained a final judgment against defendants Cetera Advisors, LLC and Cetera Advisor Networks, LLC, whom the SEC previously charged with defrauding their advisory clients by failing to disclose several sources of compensation.
The Securities and Exchange Commission obtained a final judgment against defendants Cetera Advisors LLC and Cetera Advisor Networks LLC, whom the SEC previously charged with defrauding their advisory clients by failing to disclose several sources of compensation.
According to the SEC’s amended complaint filed on October 11, 2019 in the United States District Court for the District of Colorado, the Cetera defendants breached their fiduciary duty and defrauded retail advisory clients by failing to properly disclose conflicts of interest related to the firms’ receipt of compensation in the form of 12b-1 fees, revenue sharing, administrative fees and mark-ups.
According to the filing, investors paid Cetera Advisors and Cetera Advisor Networks to select and manage their investments. Cetera continuously recommended and invested client assets in investments that cost clients more when less expensive, identical investments were available.
Both entities also failed to disclose that they had numerous material conflicts of interest in providing investment advice to their clients, including that some investment choices generated millions of dollars of additional revenue for Cetera, while other investment choices would have generated much less or no additional revenue.
The Cetera entities consented to entry of a final judgment permanently enjoining each of them and ordered them to pay disgorgement of $5,614,509, plus prejudgment interest of $990,961 and ordered each of them to pay a $1,000,000 civil money penalty.
