SEC Charges Cetera Advisors with Fraud for Overpriced Mutual-Fund-Shares Sales
The Business Trial Group (BTG) is investigating claims against Cetera Advisors (Cetera) for selling overpriced mutual-fund shares.
The Securities and Exchange Commission has charged Cetera with directing its investment advisors to recommend investments in overpriced mutual funds, earning the firm millions of dollars in unnecessary fees. According to the SEC, identical investment alternatives were available at lower prices.
Cetera allegedly earned nearly $11 million in undisclosed fees from the mutual funds and a clearing firm. Cetera also allegedly failed to disclose its sales conflict to customers. The SEC alleges that the sales – which occurred between 2012 through the end of 2016 – were illegal, fraudulent, and violated fiduciary duties.
Cetera allegedly earned about $5 million more than if it had sold lower-cost share classes. Cetera also allegedly received over $2 million from a clearing broker for investing in certain funds, and an additional $1.7 million in revenue-sharing fees from mutual-fund companies. Cetera also allegedly directed its clearing broker to mark up certain “service” fees by up to 300 percent, resulting in an additional $2 million of overcharges.
Cetera Advisors is a registered investment advisor. With more than 1,000 advisors, Cetera Advisors is the second largest affiliate of Cetera Financial Group. According to the SEC, Cetera Financial’s internal committee recommended to rebate some of the overcharges to customers, but Cetera waited over two years to begin the rebates.
BTG Protects Investors Rights
Please contact one of our experienced securities attorneys if you feel you have been a victim of over-charges by Cetera. Attorneys Jared Levy (561-812-1541) and Aiman Farooq (954-327-3041) will be happy to discuss your potential claims regarding any overcharges by Cetera or any investment losses you suffered with a brokerage firm or registered investment advisor.
The Business Trial Group at Morgan & Morgan helps investors recover their financial losses on a contingency fee basis. You will never be charged hourly fees or expensive retainers. We are only paid if we successfully recover money for you. Backed by the size and skill of 700 lawyers and offices throughout the country, the Business Trial Group is part of the largest contingency law firm in the nation. We regularly battle against brokerage firms, investment advisory firms, and banks, and have helped investors recover tens of millions of dollars of investment losses.