Commonwealth Financial Network has agreed to pay $5 million to the Securities and Exchange Commission to settle a long-running conflict-of-interest case nearly a year after an appeals court overturned a $93 million court-ordered judgment.
Commonwealth agreed to the $5 million payment without admitting or denying the allegations, according to a final judgment proposed Friday in U.S. District Court in Massachusetts.
"We are pleased with this resolution and happy to put this matter behind us," said Peggy Ho, Commonwealth general counsel and chief risk officer, in a statement emailed to ThinkAdvisor on Monday.
The long-running case dates back to 2019, when the SEC sued Commonwealth, alleging that from at least July 2014 through December 2018, the company breached its fiduciary duty to advisory clients by failing to disclose conflicts of interest in a revenue-sharing program with National Financial Services.
Specifically, the SEC contended Commonwealth failed to tell clients that some mutual fund share classes generated millions of dollars in revenue-sharing payments for the firm, while other, cheaper share classes would have generated much less, or no, additional revenue.
In March 2024, the court ordered the firm to pay $93 million, including $65.6 million in disgorgement, $21.2 million in interest and a civil penalty of $6.5 million.
A federal appeals court reversed that ruling in April 2025 and remanded the case for further proceedings, holding that a jury should decide whether the firm's alleged disclosure omissions were "material," the Eversheds Sutherland attorneys representing Commonwealth said in a statement at the time.
The SEC and Commonwealth reached a tentative settlement this year and the judge gave them until March 31 to file a joint status report.
LPL Financial acquired Commonwealth for $2.7 billion last year.
CityWire reported on the settlement earlier Monday.
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