Cetera Financial Specialists, LLC, headquartered in Schaumburg, Illinois, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities.
Registered with FINRA since 1982, Cetera Financial Specialists currently has 1,580 registered representatives and 1,009 branch offices. FINRA found that from January 2013 to December 2014, Cetera Financial Specialists failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that Cetera Financial Specialists failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Cetera Financial Specialists allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.
FINRA found that during the relevant time period, Cetera Financial Specialists approved 786 L-share variable annuity contracts which had a long-term income rider, an investment which has conflicting time horizons. FINRA goes on to state that in many cases, the customer purchasing the L-share variable annuity had a long-term investment horizon of over seven years. This fact was a red flag that a different investment with lower fees would be more suitable for the customer. FINRA alleges that Cetera Advisor Networks failed to identify and investigate these red flags. Without admitting or denying the FINRA findings, Cetera Financial Specialists was ordered to pay a $350,000 fine.
FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like Cetera Financial Specialists, which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your Cetera Financial Specialists account due to an unsuitable variable annuity investment? Did your stockbroker make an unsuitable recommendation that doesn’t fit with your investment goals? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Cetera Financial Specialists stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.