Osaic Wealth Inc. Complaints: Regulatory Overview and History

The White Law Group reviews the regulatory history of Osaic Wealth Inc. and lawsuits against the firm.

Osaic Wealth (CRD#: 23131/SEC#: 801-54859,8-40218), based in Jersey City, NJ, is a dual-registered broker-dealer and investment advisory firm 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. This includes a range of Osaic Wealth Inc. complaints by customers The following is a review of the firm and its regulatory history.

Osaic Acquires Lincoln Financial Firms

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

According to reports, despite concerns about its financial profile following some client complaints, Osaic Wealth Inc’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 Lincoln’s 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. 

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

Advisor Group was initially 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). It stores and tracks information about individuals and firms, such as Osaic Wealth Inc., involved in the securities industry, including any lawsuits and customer complaints filed against them.

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

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

November 2024: FINRA censured and fined Osaic Wealth Inc. (formerly SagePoint) regarding excessive and unsuitable options trading following client complaints.

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.

According to customer complaints, one representative from Osaic Wealth Inc. (“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 the customer and her mother. Consequently, the two Osaic Wealth Inc. customers filed complaints after incurring over $60,000 in commissions and fees and 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 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 following several complaints, Osaic Wealth and Securities America, Inc. allegedly failed to establish and maintain a supervisory system to safeguard customer records and information from January 2021 to March 2023. They also allegedly violated the Safeguards and FINRA Rules 3110 and 2010 by not implementing adequate cybersecurity measures at their branch offices. This led to multiple cyber intrusions and customers’ nonpublic personal information exposure.

Despite being notified of deficiencies by FINRA examinations and subsequent complaints, Osaic Wealth Inc. reportedly did not enhance its 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 Wealth, Inc., previously known as Advisor Group, Inc., following a series of complaints. 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, which led to their 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.”  The violations were discovered after several Osaic Wealth, Inc. complaints were filed.

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 when rolling over 529 plans from one state plan to another. Some customers complained against Osaic Wealth Inc., claiming they were eligible for these waivers or special share classes but did not receive them. Therefore, respondents violated MSRB Rule G-27.

According to FINRA, the firms displayed extraordinary cooperation, so they were ordered to pay restitution totaling approximately $515,000 plus interest and censure, 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.  The negligence was discovered after customers contacted FINRA with Osaic Wealth, Inc. complaints.

GPB Capital failed 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, mainly through broker-dealers, including those 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.

Responding to the complaints, each firm associated with Osaic Wealth Inc. agreed to sanctions totaling hundreds of thousands of dollars, including censure, fines, and partial restitution to affected investors.

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. 

According to the complaints, these three Advisor Group firms associated with Osaic Wealth Inc. utilized written supervisory procedures that inadequately addressed the suitability factors of 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 who filed complaints against Osaic Wealth, Inc. and those who did not. 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 are responsible for adequately supervising their employees and ensuring the necessary procedures and systems for detecting misconduct.

According to customer complaints, several registered representatives employed by Osaic Wealth, Inc., 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 broker registered with SagePoint Financial Inc. (now Osaic Wealth Inc.), was barred from the securities industry by FINRA after Osaic’s discharge 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 issued by firms such as Osaic Wealth, Inc. are frequently targets of complaints and thus 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, a firm now owned by Osaic Wealth, Inc. when the complaints against him were filed.

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, their brokerage firm 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. This includes complaints and lawsuits against firms such as Osaic Wealth, Inc. Since its launch in 2010, the firm has handled over 700 FINRA arbitration cases.

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

The White Law Group represents investors in all types of securities related complaints against firms like Osaic Wealth Inc., 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 their financial advisors defrauded. For more information, please visit our website, www.whitesecuritieslaw.com.

If you have suffered losses investing with Osaic Wealth, Inc. and are considering filing a complaint, please call The White Law Group at 888-637-5510.

Frequently Asked Questions 

How are fraudulent promissory note schemes typically conducted? 

Promissory notes are a form of debt companies issue to raise money. Under such schemes, the orchestrator convinces an unlicensed, independent life insurance company to sell promissory notes to investors. The agent then sells the notes by touting their high rates of return with low risk. Once the client invests in the promissory note, the orchestrator of the scheme then pays the insurance agent a commission and keeps the rest. Usually, the scheme resembles a classic Ponzi Scheme, in which the person who organized the Promissory Note scheme pays investors small returns using money they collected from other investors. Thus, the scheme is built on recruiting new investors rather than the market.

Can I pursue arbitration if I have suffered investment losses? 

If you have suffered significant investment losses, you may have grounds for an arbitration claim against our broker and their employer. However, this depends on whether your broker engaged in negligent or fraudulent behavior. Brokers are typically not responsible for investment losses related to market downturns. In contrast, brokers who push a complex, illiquid investment on clients who lack the liquidity and required investment experience could be considered negligent. In most cases, broker misconduct and negligence cases are litigated in front of a FINRA arbitration panel with the support of a securities fraud attorney.

What are common forms of fraud committed by broker-dealers like Osaic Wealth? 

Several fraudulent schemes have been perpetrated by brokers historically. One of the most infamous forms of fraud is Ponzi Schemes, in which a broker recruits new investors by promising extraordinarily high returns. Rather than taking their funds and investing them in the market, the broker uses the funds to pay others who previously invested. The scheme thus relies on recruitment rather than market performance. A second common form of fraud is “selling away” in which a broker encourages clients to invest in a private placement that the broker’s employer does not recognize. Typically, the broker has some financial interest in the private placement and stands to benefit by having clients invest in it.