On October 13, 2022, the Securities and Exchange Commission obtained a final judgment against defendants Cetera Advisors, LLC and Cetera Advisor Networks, LLC, whom the SEC previously charged with defrauding their advisory clients by failing to disclose several sources of compensation.
According to the SEC’s amended complaint filed on October 11, 2019, in the United States District Court for the District of Colorado, the Cetera defendants breached their fiduciary duty and defrauded retail advisory clients by, among other things, 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.
The Cetera entities consented to entry of a final judgment permanently enjoining each of them from violations of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder; ordering them to pay disgorgement on a joint and several basis of $5,614,509, plus prejudgment interest of $990,961; and ordering each of them to pay a $1,000,000 civil money penalty. The final judgment resolves all of the SEC’s claims asserted in the district court litigation.