Cetera Advisors and Cetera Advisor Networks – Review of Regulatory History
The White Law Group reviews the regulatory history of FINRA-registered broker dealers, Cetera Advisors LLC and Cetera Advisor Networks LLC, wholly owned subsidiaries of Cetera Financial Group.
Cetera Advisors LLC (CRD #10299), in Greenwood Village Colorado, employs 1,019 advisors and manages $21.2 billion. The firm reportedly has 22 disclosures on its broker record including 14 regulatory actions, 1 civil action and 7 arbitrations.
Based in El Segundo, California, Cetera Advisor Networks, LLC (CRD #13572), has a staff of 2,519 advisors and $50 billion in assets under management. The firm reportedly has 35 disclosures on its broker record including 18 regulatory actions, 2 civil actions and 15 arbitrations.
FINRA, the self-regulator that oversees brokers and brokerage firms and the SEC (Securities and Exchange Commission) may impose sanctions such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.
FINRA BrokerCheck may also report arbitration awards related to customer disputes. These awards typically indicate the outcome of arbitration proceedings, which could result in financial compensation for unhappy customers. The presence of multiple arbitration awards against a broker or firm can indicate a history of unresolved customer complaints or poor conduct. The following is a brief breakdown of publicly available information regarding Cetera Advisors and Cetera Advisor Networks and its securities sales practices and FINRA regulatory history.
For more information on Cetera Advisors and Cetera Advisor Networks, you can visit FINRA BrokerCheck.
The White Law Group has filed several FINRA claims against Cetera Advisors for allegations of unsuitable investment recommendations, among others.
FINRA Lawsuit filed against Cetera Advisors In June 2022, The White Law Group filed a claim against Cetera Advisors on behalf of a California resident, alleging violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. Cetera Advisors LLC allegedly unsuitably invested its clients in Hospitality Investors Trust Inc. and other alternative investments. The FINRA claim was seeking damages in an amount between $500,000.01 and $1,000,000.
Lawsuit Filed Against Cetera over High-Risk Investments In March 2021, The White Law Group filed a FINRA claim on behalf of a retired Bend, Oregon couple alleging Cetera Advisor George Merhoff, Jr. unsuitably invested his clients in high-risk energy investments and MLPs. The claim alleged violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision and seeks to recover losses between $500,000 and $1,000,000. George Merhoff, Jr., the broker of record, reportedly had 49 customer complaints at the time of the filing. Allegations included unsuitable investments and misrepresentation, among others. This was one of several claims The White Law Group filed against Cetera for alleged losses with George Merhoff Jr.
FINRA Claim Filed Against Cetera Advisors, LLC over Investment Losses In April 2017, The White Law Group filed a FINRA claim against Cetera Advisors, LLC involving high risk oil & gas investments purportedly sold to clients by George Merhoff, Jr. This claim was submitted to FINRA Dispute Resolution on behalf of a California couple alleging claims for violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision.
Cetera Advisors Review of Broker Misconduct and Customer Complaints
There have been numerous cases of registered representatives employed by Cetera Advisors/Cetera Advisor Networks who were allegedly involved in broker misconduct and fraudulent activities. Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim.
April 2022: Cetera Advisors broker Marianne Smith (CRD#: 1587765) was reportedly barred from the securities industry after she allegedly deposited customer checks into accounts maintained by a third party. Between January 31, 2018, and February 27, 2021, three Cetera Advisors customers purportedly gave Smith ten checks totaling $45,100 made payable to a mutual fund company affiliated with the firm. The senior customers reportedly directed Smith to use the checks to fund their mutual fund investments. Smith instead allegedly used the money to purchase mutual fund shares for a family member of Smith.
June 2021: Cetera Advisor Networks broker David Rockwell of Cape Coral, Florida was sentenced to five years in federal prison for wire fraud and bank fraud after pleading guilty. As part of his sentence, the court also entered a money judgment of $1,018,000, the proceeds of his wire and bank fraud. Rockwell, who was registered with Cetera Advisor Networks, allegedly defrauded clients by stealing clients’ funds for his own personal use. Rockwell also purportedly defrauded a federally insured bank when he applied for two lines of credit, totaling $700,000, in his clients’ names without their knowledge or permission. Rockwell allegedly used the funds that he had obtained from the loans for personal expenses.
Cetera Regulatory Failures
FINRA and the SEC may impose regulatory actions against financial advisors and broker-dealers such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation. Cetera Advisors currently has 22 regulatory events and Cetera Advisor Networks has 35, indicated by their CRD (broker reports). The following is a brief review of a few of the Cetera firms’ regulatory failures.
October 24, 2022: Cetera Advisors, LLC and Cetera Advisor Networks, LLC reportedly settled charges with the SEC for allegedly defrauding their advisory clients by failing to disclose several sources of compensation. Cetera reportedly breached their fiduciary duty by failing to properly disclose conflicts of interest related to the firms’ receipt of compensation in the form of 12b-1 fees, revenue sharing, administrative fees, and mark-ups, according to the SEC’s amended complaint. Cetera to pay $7 Million for Allegedly Defrauding Advisory Clients
December 2020: FINRA sanctioned 3 Cetera firms over alleged deficiencies in supervising dually registered representatives (DRRs). The Cetera firms allegedly failed to have a reasonably designed supervisory system in place to oversee certain private securities transactions conducted by their DRRs at unaffiliated or “outside” RIAs. Cetera Advisor Networks agreed to a fine of $750,000, Cetera Advisors agreed to a fine of $150,00 and Cetera Financial Specialists to a fine of $100,000. FINRA said that the firms were aware of the deficiencies as early as 2013. 3 Cetera Firms to pay $1 Million for Supervisory Issues
September 2019: The SEC charged Cetera Advisors with breaching its fiduciary duty and defrauding its retail advisory clients in connection with the sales of mutual funds. The SEC alleged that the firm failed to disclose conflicts of interest related to its receipt of undisclosed compensation. SEC charges Cetera Advisors with defrauding clients
December 2018: FINRA fined Cetera Advisor Networks $700,000 and ordered $691,800 in customer restitution in connection with excessive trades, also known as churning in the securities industry. The Cetera broker, working in Chadds Ford, Pennsylvania allegedly made hundreds of short-term purchases and sales of A-share mutual funds in the accounts of 14 customers, some of them seniors. Customers were reportedly charged new front-end commissions with each trade, to the benefit of the broker and the firm, but lost clients nearly $700,000 over a six-year period. Cetera fined $1.4 million for Churning
Failure to Supervise
All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
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.
If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced attorney who is knowledgeable about securities law can greatly increase your chances of success.
Hire a FINRA Attorney
If you have suffered losses investing with Cetera Advisors or Cetera Advisor Networks, or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help you by filing a FINRA claim. To contact the firm, please call 888-637-5510
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.
Our firm 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, including experience working at FINRA and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.
Although our offices are in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. For more information on The White Law Group, please visit https://whitesecuritieslaw.com.
Tags: broker-dealer review, Cetera Advisor Networks, Cetera Advisors, David Rockwell, failure to supervise, FINRA claims, finra sanctions, George Merhoff, Marianne Smith Last modified: June 12, 2023