Cetera Faces $1m Fines for Failure to Supervise Private Securities Transactions

FINRA Censures Cetera and Issues Substantial Fine After Multiple Rule Violations

The Financial Industry Regulatory Authority (FINRA) recently censured and issued a fine totaling $1 million against Cetera Advisor Networks LLC, Cetera Advisors LLC, and Cetera Financial Specialists LLC for failing to supervise certain private securities transactions conducted by their dually-registered representatives (DRRs).

The national securities law firm, Levin Law, P.A. (“Levin Law”), continues to investigate Cetera firms for their failure to comply with several National Association of Securities Dealers (NASD) and FINRA rules. Investors who have suffered losses as a result of a brokerage firm’s failure to supervise may be entitled to compensation through a FINRA arbitration claim. 

If a Cetera dually-registered representative recommended or sold private securities, resulting in substantial losses, contact Levin Law, P.A. at (305) 402-9050 or at contact@levinlawpa.com for a free consultation.

Failure to Establish, Maintain, & Enforce a Supervisory System

According to publicly available information, from January 2011 through December 2018, Cetera Advisor Networks LLC (Networks) and Cetera Advisors LLC (Advisors) and from November 2012 through January 2018, Cetera Financial Specialists LLC (Specialists) failed to “establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to supervise certain private securities transactions conducted by their dually-registered representatives (DRRs) at unaffiliated or “outside” registered investment advisors.” By 2018, Cetera DRRs managed customer assets in excess of $80 billion.

A broker-dealer firm’s failure to establish, maintain and enforce an adequate supervisory system is a direct violation of NASD Rules 3010 (a) and (b) and FINRA Rules 3110 (a) and (b) and 2010. 

Failure to Implement Supervisory Systems

Despite knowing of their failure to comply with the supervisory requirements of their dually-registered representatives, Cetera failed to implement the necessary systems to address the problem. As noted in the Letter of Acceptance, Waiver, and Consent, Cetera was made aware of the supervisory deficiencies through multiple Securities and Exchange Commission (SEC) examinations. 

As a result of these violations, FINRA ordered several sanctions against Cetera firms, including a censure, a $1 million fine, and the requirement to review and revise their systems, policies, and procedures concerning the supervision of their DRRs’ securities transactions.

Contact Levin Law for a Free Case Evaluation

Levin Law managing partner Brian Levin has helped to recover millions of dollars for victims of investment and securities fraud. A brokerage firm’s failure to establish, maintain and enforce reasonable supervisory systems can result in devastating losses for investors. 

If you believe that you have suffered financial loss due to a firm’s failure to supervise its representatives, contact Levin Law at (305) 402-9050 or via email at contact@levinlawpa.com for a free consultation. Most cases are accepted on a contingency fee basis, meaning that you would not be responsible for Levin Law’s attorney fees unless money is recovered on your behalf.

About Levin Law

Levin Law is a premier national securities, commodities, futures, and class action law firm. Brian Levin, Levin Law’s founding attorney, has helped recover in excess of $100,000,000 through arbitration and litigation for individual and institutional investors throughout the country and the rest of the world. Levin Law represents retirees, individual investors, high-net-worth investors, ultra-high-net-worth investors, institutions, family offices, trusts, publicly held companies, and others.