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September 29, 2023 at 01:40 PM
What You Need to Know
- Each failed to obtain verification by an independent public accountant of client funds and securities of which the firms had custody.
- The SEC hit each firm with a $100,000 penalty.
The Securities and Exchange Commission said Friday that it has fined Osaic Wealth and its affiliate broker-dealer firms — SagePoint Financial, Woodbury and FSC Securities — for violating the agency’s custody rule.
Formerly Advisor Group, Osaic Wealth announced on June 21 its rebranding and started consolidating its eight independent broker-dealers.
“While the other firms named in the [SEC] matter now operate under the legal entity that is Osaic, they still operate under their legacy names, hence Osaic the firm was fined,” Osaic said in a statement shared with ThinkAdvisor. Osaic is ”pleased to have resolved this complex and technical matter and have implemented changes to resolve the issues noted in the order.”
According to the SEC orders, from June 2017 to December 2022, Osaic Wealth and the three broker-dealers each failed to obtain verification by an independent public accountant of client funds and securities of which the firms had custody.
Each firm was ordered to pay a $100,000 penalty.
Osaic Wealth used a form agreement to govern certain aspects of the relationship among Osaic Wealth, its clients, and a clearing agent Osaic Wealth used, the SEC order stated.
“Each of these agreements included a margin account agreement that contained language, required by the Clearing Agent, that permitted the Clearing Agent to accept, without inquiry or investigation, any instructions given by Osaic Wealth concerning these clients’ accounts.”
As a consequence of Osaic Wealth “having this authority with respect to the client funds and securities in the Affected Accounts, Osaic Wealth had custody of these assets,” the SEC said.
