Cetera Investment Services, LLC Sanctioned by FINRA for Failure to Notify of Material Changes to Accounts

Cetera Investment Services, LLC (CRD# 15340) entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA after the regulatory body alleged it failed to notify account owners regarding changes to their account records.

According to the AWC, from October 1, 2008 through November 15, 2013, Cetera failed to mail or otherwise furnish 57,881 notifications to account owners of record regarding changes to their accounts, including, changes in the name of the account holder, address changes and more importantly, investment objective changes in the account.  The significance of this that any change in the investment objectives in the account would affect what would be considered a suitable investment.

As part of the AWC, Cetera agreed to a censure and a fine in the amount of $75,000.  Since Cetera’s formation in November 2012, it has been subject to nine (9) disclosures on its FINRA BrokerCheck report.

Cetera Background

Cetera is a self-clearing broker-dealer that is a wholly-owned subsidiary of Cetera Financial Group, Inc. Under Cetera Financial Group’s umbrella are several other affiliated broker-dealers, including Investors Capital Corp. (CRD# 30613), Summit Brokerage Services, Inc. (CRD# 34643) and First Allied Securities, Inc. (CRD# 32444).  In addition to operating broker-dealers under the Cetera umbrella, Cetera has also closed a few of its broker-dealers, including J.P. Turner & Company, L.L.C. (CRD# 43177).  The Firm has approximately 1,900 registered representatives and over 1,400 branch offices located primarily in banks and credit unions across the U.S, though that number could change with the winding down of a few more brokerage firms.

Brokers have a responsibility to recommend suitable investments for their customers.  This is a two-part test that needs to be passed in order for the investment to be deemed suitable.  First, there must be a reasonable basis for the recommendation of the product based on investigation and due diligence into the investment’s attributes, including benefits, risks, tax consequences, and other relevant factors.  In other words, would this generally be a fruitful investment?

Second, the broker must determine if this generally fruitful investment is suitable for the individual customer he or she is recommending it to.  This involves examining the specific customer’s investment needs and objectives, such as the client’s retirement status, long- or short-term goals, age, disability, income needs, propensity to risk, and other relevant factors.

If an advisor goes astray from these principals and evaluation, for personal gain or simply due to negligence, the advisor should be held accountable.

Contact Our Firm if You’ve Lost Money

Silver Law Group represents the interests of investors who have been the victims of investment fraud.  If have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.  A consultation is free, and you owe us nothing unless we recover.