Last Updated: April 2024
Commonwealth Financial Ordered to pay $93 Million Judgment For Failure to Disclose Conflicts of Interest
Five years of litigation between the U.S. Securities & Exchange Commission ended March 29, 2024, when the court entered a judgement ordering Commonwealth to pay a fine totaling more than $93 million.
According to the SEC complaint, Commonwealth breached its fiduciary duty when they failed to advise clients that they had the option of investing in less expensive share classes of funds. The SEC had alleged that Commonwealth had agreements with clearing firm National Financial Services (NFS) to receive portions of the fees paid to NFS. Commonwealth knew of lower cost alternatives available to clients and that those lower-cost alternatives would generate less or no revenue for Commonwealth, according to court documents.
According to the SEC Commonwealth did not make adequate disclosure regarding options available to customers.
Damages in the order include disgorgement of $65.6 million, interest of $21.2 million and a civil penalty of $6.5 million. According to the financial press this amount represents one to two years of net income for the firm.
Commonwealth Financial Network
Commonwealth Financial Network is a broker-dealer and registered investment advisory firm (RIA) with 2,200 financial advisors having nearly $300 billion under management. The $93 million fine substantially exceeds the estimated loss of $5 to $24 million Commonwealth recently reported in an SEC filing.
The CRD for Commonwealth Financial Network discloses 44 Regulatory Events and 17 arbitrations.
[LEARN MORE]: “How to Research Your Broker-What is a CRD?”
The Financial Industry Regulatory Authority
The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.
Rex Securities Law
With offices in Boca Raton, FL and Austin, TX, stockbroker fraud attorney Rex Securities Law provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers, financial advisors and broker dealers.
If you have questions about how your account has been handled, call (877) 224-3199 to speak with an experienced securities attorney at no cost to you.
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