In December 2020, FINRA fined Cetera Advisor Networks LLC, Cetera Advisors LLC, and Cetera Financial Specialists LLC $1 million, which included 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.
According to the Letter of Acceptance, Waiver & Consent, between January 2011 and December 2018, Cetera Advisor Networks LLC and Cetera Advisors LLC, and from November 2012 through January 2018, Cetera Financial Specialists LLC each 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 investments advisors (RIAs). By early 2018, these DRRs managed more than $80 billion in customer assets across more than 47,000 accounts.”
Despite the fact that Cetera Advisor Networks LLC, Cetera Advisors LLC, and Cetera Financial Specialists LLC were aware of supervisory deficiencies and efforts to addresses the deficiencies, the firms failed to implement systems and procedures to reasonably supervise the transactions. The firms also failed to make and preserve related books and records.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Cetera Advisor Networks LLC, Cetera Advisors LLC, and Cetera Financial Specialists LLC may be liable for investment or other losses suffered by its customers.
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