CETERA ADVISORS FINED $1.4 MILLION FOR EXCESSIVE TRADING

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CETERA ADVISORS FINED $1.4 MILLION FOR EXCESSIVE TRADING

The Financial Industry Regulatory Authority (“FINRA”) has fined Cetera Advisor Networks $1.4 million related to short-term mutual fund purchases of a former broker. FINRA fined Cetera $700,000 in penalties and ordered $691,000 in customer restitution for the excessive trading activity.

According to the FINRA findings, the former Cetera broker made hundreds of short-term purchases and sales of A-share mutual funds in the accounts of 14 customers. Customers were charged front-end commissions for each trade, costing them nearly $700,000 over a six-year period while enriching Cetera and the broker. This type of unsuitable excessive trading activity is known within the industry as “churning” an account.

The broker involved was barred from the securities industry last year for failing to cooperate in FINRA’s investigation into the conduct. FINRA further found that the broker had tried to “mask” the churning via stock trading between mutual fund sales and purchases.

FINRA found that Cetera failed to respond reasonably to red flags associated with the broker’s conduct between 2009 and 2015. Instead, Cetera awarded the broker with sales awards in 2013 and 2014 even after his supervisors had flagged the excessive trading. The firm only took action in 2015 after FINRA had already started its investigation.

If you lost money as a result of an unsuitable or misrepresented investment or if you lost money due to excessive trading activity in your account, whether at Cetera or another firm, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.

By |December 21st, 2018|Legal Matters|

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