The SEC alleges that unlawful gains in the amount of over $21 million occurred due to the firm’s misconduct.
The Sonn Law Group is investigating allegations of misconduct by Cetera Advisors. Under FINRA Rules, brokerage firms are liable for their brokers’ misconduct or negligence and investors may be able to their investment through FINRA arbitration. Contact Sonn Law Group today or call us at 866–827–3202 for a free consultation.
In August 2019, the SEC charged Cetera Advisors, LLC, of Denver, CO, with breaching is fiduciary duty and defrauding its retail advisory clients by, among other things, failing to disclose conflicts of interest related to the firm receiving over $10 million in undisclosed compensation.
According to the SEC, from at least September 2012 until December 2016, Cetera invested and held clients in mutual fund share classes that charged 12b-1 fees — recurring fees deducted from the fund’s assets — even when it knew these clients were eligible to invest in lower-cost shares of the same funds without 12b-1 fees.
The SEC’s complaint also alleges that Cetera participated in a program offered by its clearing broker where it agreed to share with Cetera revenues and service fees it received from certain mutual funds. As a result, Cetera had an incentive to favor these mutual funds in the program over other investments when advising clients.
The SEC’s complaint further alleges that Cetera directed its clearing broker to mark-up certain fees charged to Cetera’s advisory clients, which Cetera then received indirectly from these same clients.
Cetera allegedly failed to adequately disclose to its advisory clients each of these practices and the conflicts of interest associated with them. As a result of these failures, the SEC alleges that Cetera generated over $10 million in undisclosed compensation.
The SEC amended their complaint on October 11, 2019 adding Cetera Advisor Networks, LLC as a defendant. The amended complaint charges the defendants with violating antifraud, fiduciary, and conflicts of interest provisions of the Investment Advisors Act of 1940, and seeks permanent injunctions, disgorgement of ill-gotten gains and prejudgment interest, and penalties.
Jeffrey R. Sonn is an experienced investor losses attorney. If you suffered losses because a financial professional committed misconduct, Mr. Sonn will protect your rights and interests. Please do not hesitate to contact the Sonn Law Group today for a free review of your claim.