Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
September 03, 2019 at 02:04 PM
The Securities and Exchange Commission has charged Cetera Advisors with breaching its fiduciary duty and defrauding investor clients by failing to disclose conflicts of interest related to over $10 million in undisclosed compensation.
According to the SEC’s complaint, from at least September 2012 through December 2016, Cetera invested and held clients in mutual fund share classes that charged recurring 12b-1 fees, even when the RIA — which is part of Cetera Financial Group — knew these clients were eligible to invest in lower-cost shares of the same funds without 12b-1 fees.
“Clients whom Cetera invested in the higher-cost, otherwise identical share classes paid additional compensation to Cetera for as long as they held these investments,” according to the SEC.
The news comes about six months after the regulatory group said nearly 80 investment advisory firms would return about $125 million to clients as part of settled actions tied to 12b-1 fees received without adequate disclosure; the advisory firms include Wells Fargo Advisors Financial Network, Wells Fargo Clearing, Next Financial, Deutsche Bank, Cambridge Investment Research, Kestra Advisory Services and LPL Financial.
Last month, the SEC charged Commonwealth Financial Network with breaching its fiduciary duty by failing to disclose that it received over $100 million in a revenue-sharing arrangement related to client investments in certain share classes of “no transaction fee” and “transaction fee” mutual funds.
According to the SEC, which filed its complaint against Cetera Advisors in the U.S. District Court for the District of Colorado, the RIA allegedly participated in a program offered by its clearing broker in which it shared revenues and service fees received from certain mutual funds.
