Osaic Wealth: Regulatory History Overview

The White Law Group reviews the regulatory history of Osaic Wealth. 

Osaic Wealth (CRD#: 23131/SEC#: 801-54859,8-40218), based in Jersey City, NJ, is a dual registered broker dealer and investment advisory firm. The firm has been registered since 1988. 

According to its CRD/Broker report, Osaic Wealth has 86 disclosure events on its record, including 48 regulatory actions and 31 arbitrations, among others. The following is a review of the firm and its regualtory history.

Osaic Acquires Lincoln Financial Firms

Osaic has reportedly completed its acquisition of Lincoln Financial Advisors Corporation and Lincoln Financial Securities Corporation, collectively known as Lincoln Wealth, for $115 billion, according to reports on May 7, 2024. Over 1,400 advisors will reportedly join Osaic as a result of this acquisition. While both Lincoln firms will initially operate as stand-alone entities, they are expected to fully integrate into Osaic in the coming months without requiring any changes to account numbers.

According to reports, despite concerns about its financial profile, Osaic’s credit rating is expected to remain stable following the acquisition. Osaic’s rebranding aims to consolidate the eight Advisor Group broker/dealers under one entity, with several already converted. However, some advisory teams have departed Osaic due to the Lincoln acquisition and consolidation efforts.
As of now, the firms under the Osaic umbrella include:

Lincoln Financial Advisors Corporation
Lincoln Financial Securities Corporation

Previously known as the Advisor Group, this network of independent broker-dealers comprises several firms:

American Portfolios Financial Services Inc.
FSC Securities Corporation
Infinex Investments (now known as Osaic Institutions)
Royal Alliance Associates
SagePoint Financial
Securities America
Triad Advisors
Woodbury Financial Services

8 Advisor Group Brokerage Firms Rebrand to Osaic Wealth 

Advisor Group, one of the largest networks of independent wealth management firms in the US, has rebranded to Osaic Wealth with plans to consolidate its eight independent broker-dealers on June 21, 2023. Royal Alliance was the first of eight firms to rebrand to the Osaic Wealth(CRD #23131) name.  

The company planned to fold its broker-dealers into a single entity beginning last fall, according to numerous reports. The group serves 11,000 independent brokers through the following firms, managing $500 billion in client assets.

Advisor Group was originally owned by insurer American International Group, Inc, which sold it to Lightyear Capital in 2016.  Reverence Capital Partners reportedly purchased Advisor Group in 2019 for $2.3 billion.   

Osaic Wealth Regulatory History 

A broker-dealer’s Central Registration Depository (CRD) record is a database maintained by the Financial Industry Regulatory Authority (FINRA) and is used to store and track information about individuals and firms involved in the securities industry.  

Regulatory actions found on a broker-dealer’s CRD may include censures, fines, suspensions, and restitution, among others. They can have grave consequences for the firm’s profile and reputation.  

The following is a review of regulatory actions involving Osaic Wealth. The review includes regulatory sanctions from the Financial Industry Regulatory Authority (FINRA), the US Securities Exchange Commission (SEC) and state regulators. 

November 2024: FINRA censured and fined Osaic Services (formerly known as SagePoint) regarding excessive and unsuitable options trading.

Between June 2018 and August 2019, Osaic Services reportedly failed to implement and maintain an adequate supervisory system, including written supervisory procedures, to comply with FINRA Rules 2111 and 2360(b)(19) regarding excessive and unsuitable trading, particularly in options trading. The firm allegedly allowed registered representatives, lacking proper knowledge, training, and experience in options trading, to override automated supervisory alerts and trading restrictions.

One representative (“Broker A”) was permitted to open options positions in a customer’s account  that required margin, even though the account lacked margin approval. These transactions reportedly exposed the customer to potential losses exceeding $4.5 million—more than 22 times her liquid net worth of $200,000.

Further, the firm reportedly did not adequately address evidence that the broker was excessively and unsuitably trading in the accounts of both the customer and her mother. Consequently, the two customers incurred over $60,000 in commissions and fees, as well as more than $1.2 million in losses. This conduct violated FINRA Rules 3110, 2360(b)(20), and 2010.

Additionally, between February and June 2019, Osaic Services allegedly failed to supervise for unauthorized trading in one of the customer’s accounts after her death, resulting in further violations of FINRA Rules 3110 and 2010.

Failure to Safeguard Customer Records 

March 14, 2024 – According to a letter of acceptance, Osaic Wealth and Securities America allegedly failed to establish and maintain a supervisory system to safeguard customer records and information from January 2021 to March 2023. They allegedly violated the Safeguards Rule and FINRA Rules 3110 and 2010 by not implementing adequate cybersecurity measures at their branch offices, leading to multiple cyber intrusions and exposure of customers’ nonpublic personal information.

Despite being notified of deficiencies by FINRA examinations, the firms reportedly did not enhance their cybersecurity controls until March 2023. Each firm consented to a censure and a $150,000 fine. They also agreed to implement multi-factor authentication on all email accounts used for business and oversight procedures for adherence to the policy.

SEC Charges Osaic Investment Advisers with Violations of the Custody Rule  

September 2023 – The Securities and Exchange Commission (SEC) has settled charges against four investment advisers owned by Osaic, Inc., previously known as Advisor Group, Inc. The advisers, including FSC Securities Corporation, Osaic Wealth, Inc. (formerly Royal Alliance Associates), SagePoint Financial, Inc., and Woodbury Financial Services, failed to obtain verification by an independent public accountant of client funds and securities they had custody of due to agreements with a clearing firm.  

These agreements allowed the advisers to instruct the clearing agent regarding client accounts without inquiry, leading to the advisers being deemed to have custody of these assets. As a result, they violated Section 206(4) of the Advisers Act and Rule 206(4)-2, known as the “custody rule.”  

Each adviser consented to an SEC order acknowledging willful violation of the custody rule and agreed to a cease-and-desist order, a censure, and a $100,000 civil penalty to settle the charges. 

Failure to Supervise 529 Plans 

January 2023 – According to FINRA, the securities regulator, from September 2015 to September 2020, Securities America, Royal Alliance, and SagePoint failed to establish and maintain a supervisory system reasonably designed to ensure that all eligible customers received applicable sales charge waivers or special share classes in connection with rolling over 529 plans from one state plan to another. Some customers who were eligible for these waivers or special share classes did not receive them. Therefore, Respondents violated MSRB Rule G-27. 

According to FINRA, the firms displayed extraordinary cooperation thus were ordered to pay restitution totaling approximately $515,000 plus interest, and censures, but no fines. 

Negligence involving GPB Capital Offerings 

November 2022 – According to FINRA, between May 4, 2018, and June 29, 2018, FSC Securities, Royal Alliance, SagePoint Financial, and Woodbury Financial negligently failed to disclose to investors crucial information regarding an offering related to GPB Capital Holdings, LLC.  

This involved GPB Capital’s failure to submit necessary filings, including audited financial statements, to the Securities and Exchange Commission (SEC). As a result, each firm violated FINRA Rule 2010.  

GPB Capital, a New York-based alternative asset management firm, raised funds by selling limited partnership interests, particularly through broker-dealers, including the firms mentioned. Despite being aware of delays in filing audited financial statements, the firms continued to sell limited partnership interests without informing investors, violating FINRA Rule 2010.  

Each firm agreed to sanctions, including censure, fines, and partial restitution to affected investors, totaling hundreds of thousands of dollars. 

More Supervisory Issues with 529 Plans 

December 2021– According to a FINRA Letter of Acceptance, between January 1, 2013, and June 30, 2018, Royal Alliance, Sagepoint, and FSC failed to establish and maintain an adequate supervisory system to oversee 529 plan share-class recommendations, contravening MSRB Rule G-27.  

These three Advisor Group firms utilized written supervisory procedures that inadequately addressed the suitability factors pertinent to 529 plan investments. Moreover, their transaction review system was not sufficiently designed to identify 529 plan share-class recommendations that deviated from the investment time horizon suggested by the account beneficiary’s age.  

The firms voluntarily disclosed potential issues with their supervisory system to FINRA under the 529 Plan Share Class Initiative outlined in Regulatory Notice 19-04. They also proposed a plan to remedy affected customers. Consequently, the Acceptance, Waiver, and Consent (AWC) agreements include censure for each firm, along with orders for restitution and estimated interest totaling $485,441, without imposing fines. 

Customer Complaints and Broker Misconduct 

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.   

There have been several cases of registered representatives employed by Osaic Wealth who were allegedly involved in broker misconduct and fraudulent activities. 

SagePoint (Osaic) Broker Barred for Allegations of Promissory Notes Sales 

February 15, 2024 – A former financial advisor registered with SagePoint Financial Inc. (now Osaic Wealth Inc.), was barred from the securities industry by FINRA after being discharged by Osaic in December for allegedly selling promissory notes without prior approval. He reportedly failed to cooperate with FINRA’s investigation, leading to his bar from the industry. He had been a veteran in the securities industry for 37 years and worked at SagePoint from 2005 until December 2023.  Promissory notes are closely monitored by regulators, with short-term notes often being associated with fraudulent schemes.

Broker Barred after Short-term Trading Allegations

November 2023 – Based on public records, FINRA has purportedly barred financial advisor Rodney Ferruso (CRD#: 1457661) from the securities industry. Allegedly, Ferruso declined to participate in on-the-record testimony requested by FINRA as part of its investigation. This inquiry pertained to the circumstances outlined in a Form U5 submitted by his member firm, indicating that they allowed his resignation after discovering short-term trading of specific mutual funds in his customer accounts. Ferruso was reportedly affiliated with Royal Alliance at the time. 

To learn more about Royal Alliance Associates regulatory history please see: Royal Alliance Associates: Regulatory Overview 

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.  

National Securities Attorneys  

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases. 

The Financial Industry Regulatory Authority (FINRA) operates the largest dispute resolution forum in the securities industry. In fact, FINRA Dispute Resolution is the forum for all disputes between investors, brokerage firms and individual brokers.  This is because most brokerage firms have mandatory arbitration clauses in their account agreements that require investors to file their disputes through FINRA. 

The White Law Group represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others. 

With over 30 years of securities law experience, The White Law Group has the expertise to help investors who were defrauded by their financial advisors. For more information, please visit our website, www.whitesecuritieslaw.com.      

If you have suffered losses investing with Osaic Wealth and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510. 

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