BrokerCheck Report CETERA FINANCIAL SPECIALISTS LLC CRD# 10358
Section Title Page(s) Report Summary 1
Firm Profile 2 - 15
Firm History 16
Firm Operations 17 - 28
Disclosure Events 29
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CRD# 10358 This report summary provides an overview of the brokerage firm. Additional information for this firm can be found in the detailed report. SEC# 8-27082 Firm Profile Disclosure Events Main Office Location This firm is classified as a limited liability company. 1450 AMERICAN LANE This firm was formed in Delaware on 10/31/2012. Brokerage firms are required to disclose certain 6TH FLOOR, SUITE #650 Its fiscal year ends in December. criminal matters, regulatory actions, civil judicial SCHAUMBURG, IL 60173 proceedings and financial matters in which the firm or Regulated by FINRA Chicago Office Firm History one of its control affiliates has been involved. Mailing Address Information relating to the brokerage firm's history Are there events disclosed about this firm? Yes 1450 AMERICAN LANE such as other business names and successions 6TH FLOOR, SUITE #650 (e.g., mergers, acquisitions) can be found in the SCHAUMBURG, IL 60173 detailed report. The following types of disclosures have been reported: Business Telephone Number Firm Operations Type Count 888-528-2987 This firm is registered with: Regulatory Event 11 • the SEC Arbitration 3 • 1 Self-Regulatory Organization • 53 U.S. states and territories
Is this brokerage firm currently suspended with any regulator? No
This firm conducts 13 types of businesses. This firm is affiliated with financial or investment institutions. This firm has referral or financial arrangements with other brokers or dealers.
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 1 www.finra.org/brokercheck User Guidance Firm Profile
This firm is classified as a limited liability company. This firm was formed in Delaware on 10/31/2012. Its fiscal year ends in December.
Firm Names and Locations This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailing addresses, telephone number, and any alternate name by which the firm conducts business and where such name is used.
CETERA FINANCIAL SPECIALISTS LLC Doing business as CETERA FINANCIAL SPECIALISTS LLC CRD# 10358 SEC# 8-27082
Main Office Location 1450 AMERICAN LANE 6TH FLOOR, SUITE #650 SCHAUMBURG, IL 60173 Regulated by FINRA Chicago Office
Mailing Address 1450 AMERICAN LANE 6TH FLOOR, SUITE #650 SCHAUMBURG, IL 60173
Business Telephone Number 888-528-2987
Other Names of this Firm
Name Where is it used CETERA FINANCIAL BROKERAGE SERVICES AK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, PR, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC WV, WY 2 AK, AL, AR, AZ, CA, CO, CT, DC, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NH, NJ, NM, NV, NY, OH, OK, OR, PA, PR, www.finra.org/brokercheck RI, SC, SD, TN, TX, User Guidance UT, VA, VT, WA, WI, WV, WY
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 3 www.finra.org/brokercheck User Guidance Firm Profile This section provides information relating to all direct owners and executive officers of the brokerage firm. Direct Owners and Executive Officers
Legal Name & CRD# (if any): CETERA FINANCIAL SPECIALISTS SERVICES LLC Is this a domestic or foreign Domestic Entity entity or an individual?
Position SOLE MEMBER Position Start Date 02/1984 Percentage of Ownership 75% or more Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): BANKS, ELAYNE CAMILLE 3070202 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): BOWMAN, TIMOTHY JOSEPH 2247374 Is this a domestic or foreign Individual entity or an individual?
Position PRINCIPAL FINANCIAL OFFICER Position Start Date 06/2021 Percentage of Ownership Less than 5% ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 4 www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): BUCHHEISTER, JEFFREY ROBERT 4709900 Is this a domestic or foreign Individual entity or an individual?
Position CHIEF FINANCIAL OFFICER Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): CHAFFIN, GARY LYNN 6819431 Is this a domestic or foreign Individual entity or an individual?
Position TAX OFFICER Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): GILL, GEORGE ANDREW
©2021 FINRA. All rights reserved. Report about4498537 CETERA FINANCIAL SPECIALISTS LLC 5 www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) 4498537 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): GOK, LISA ANNE 5059738 Is this a domestic or foreign Individual entity or an individual?
Position SECRETARY Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): HALEY, BRIAN JOSEPH 4361815 Is this a domestic or foreign Individual entity or an individual?
Position CHIEF COMPLIANCE OFFICER AND SECRETARY Position Start Date 07/2016 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the©2021 firm? FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 6 www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): IYENGAR, JANANI RAVI 6780478 Is this a domestic or foreign Individual entity or an individual?
Position TREASURER Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): KESTERSON, BARBARA JO 2747533 Is this a domestic or foreign Individual entity or an individual?
Position CHIEF OPERATING OFFICER AND PRINCIPAL OPERATIONS OFFICER Position Start Date 10/2018 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): KIM, DAVID 6228305
Is©2021 this FINRA. a domestic All rights orreserved. foreign Report aboutIndividual CETERA FINANCIAL SPECIALISTS LLC 7 entity or an individual? www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Is this a domestic or foreign Individual entity or an individual?
Position ASSISTANT SECRETARY Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): KIRCHER, NICHOLE MARIE 2876887 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): KRUEGER, RONALD GEORGE 2651416 Is this a domestic or foreign Individual entity or an individual?
Position MANAGER, CHIEF EXECUTIVE OFFICER AND PRESIDENT Position Start Date 07/2020 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm? ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 8 www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): MIZUGUCHI, MAURA RIE 5769181 Is this a domestic or foreign Individual entity or an individual?
Position CHIEF ACCOUNTING OFFICER Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): NEARY, JOSEPH DANIEL 2993505 Is this a domestic or foreign Individual entity or an individual?
Position MANAGER AND VICE PRESIDENT Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): RAMOS, RAMON 2160203
Is©2021 this FINRA. a domestic All rights orreserved. foreign Report aboutIndividual CETERA FINANCIAL SPECIALISTS LLC 9 entity or an individual? www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Is this a domestic or foreign Individual entity or an individual?
Position MONEY LAUNDERING REPORTING OFFICER Position Start Date 02/2013 Percentage of Ownership Less than 5% Does this owner direct the No management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): ROTHENBERG, JON HOWARD 2737327 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 04/2012 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): SMILEY, STANLEY ROBERT 3004604 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 04/2012 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm? ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 10 www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): STINSON, TIMOTHY EARL MCCOY 2272183 Is this a domestic or foreign Individual entity or an individual?
Position VICE PRESIDENT Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): TAYLOR, THOMAS BYRON 2193426 Is this a domestic or foreign Individual entity or an individual?
Position MANAGER Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
Legal Name & CRD# (if any): VAN HAVERMAAT, DAVID JAMES 7042846
Is©2021 this FINRA. a domestic All rights orreserved. foreign Report aboutIndividual CETERA FINANCIAL SPECIALISTS LLC 11 entity or an individual? www.finra.org/brokercheck User Guidance Firm Profile
Direct Owners and Executive Officers (continued) Is this a domestic or foreign Individual entity or an individual?
Position ASSISTANT SECRETARY Position Start Date 05/2021 Percentage of Ownership Less than 5% Does this owner direct the Yes management or policies of the firm?
Is this a public reporting No company?
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 12 www.finra.org/brokercheck User Guidance Firm Profile This section provides information relating to any indirect owners of the brokerage firm. Indirect Owners
Legal Name & CRD# (if any): ARETEC GROUP, INC. Is this a domestic or foreign Domestic Entity entity or an individual?
Company through which CETERA FINANCIAL HOLDINGS, INC. indirect ownership is established Relationship to Direct Owner SOLE MEMBER Relationship Established 04/2014 Percentage of Ownership 75% or more Does this owner direct the Yes management or policies of the firm? Is this a public reporting No company?
Legal Name & CRD# (if any): CETERA FINANCIAL GROUP, INC. Is this a domestic or foreign Domestic Entity entity or an individual?
Company through which CETERA FINANCIAL SPECIALISTS SERVICES LLC indirect ownership is established Relationship to Direct Owner SOLE MEMBER Relationship Established 04/2012 Percentage of Ownership 75% or more Does this owner direct the Yes management or policies of the firm? Is this a public reporting No company?
Legal Name & CRD# (if any): CETERA FINANCIAL HOLDINGS, INC. Is this a domestic or foreign Domestic Entity entity or an individual?
Company through which CETERA FINANCIAL GROUP, INC. indirect©2021 FINRA. ownership All rights reserved. is Report about CETERA FINANCIAL SPECIALISTS LLC 13 established www.finra.org/brokercheck User Guidance Firm Profile
Indirect Owners (continued) Company through which CETERA FINANCIAL GROUP, INC. indirect ownership is established Relationship to Direct Owner SHAREHOLDER; 100% OF COMMON STOCK Relationship Established 11/2009 Percentage of Ownership 75% or more Does this owner direct the Yes management or policies of the firm? Is this a public reporting No company?
Legal Name & CRD# (if any): GC TWO HOLDINGS, INC. Is this a domestic or foreign Domestic Entity entity or an individual?
Company through which GC TWO INTERMEDIATE HOLDINGS, INC. indirect ownership is established Relationship to Direct Owner OWNER Relationship Established 10/2018 Percentage of Ownership Other General Partners Does this owner direct the Yes management or policies of the firm? Is this a public reporting No company?
Legal Name & CRD# (if any): GC TWO INTERMEDIATE HOLDINGS, INC. Is this a domestic or foreign Domestic Entity entity or an individual?
Company through which ARETEC GROUP, INC. indirect ownership is established Relationship to Direct Owner OWNER Relationship Established 10/2018 Percentage of Ownership Other General Partners ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 14 www.finra.org/brokercheck User Guidance Firm Profile
Indirect Owners (continued) Percentage of Ownership Other General Partners Does this owner direct the Yes management or policies of the firm? Is this a public reporting No company?
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 15 www.finra.org/brokercheck User Guidance Firm History This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.
This firm was previously: GENWORTH FINANCIAL SECURITIES CORPORATION Date of Succession: 11/01/2012 Predecessor CRD#: 10358 Predecessor SEC#: 8-27082 Description CETERA FINANCIAL SPECIALISTS LLC IS THE SUCCESSOR BY MERGER TO GENWORTH FINANCIAL SECURITIES CORPORATION AND WILL BE ASSUMING SUBSTANTIALLY ALL OF THE ASSETS AND LIABILITIES OF TEH PREDECESSOR FIRM. THIS SUCCESSION DOES NOT INVOLVE A SUBSTANTIAL CHANGE IN OWNERSHIP AND/OR CONTROL.
This firm was previously: GENWORTH FINANCIAL SECURITIES CORPORATION Date of Succession: 11/01/2012 Predecessor CRD#: 10358 Description CETERA FINANCIAL SPECIALISTS LLC IS THE SUCCESSOR BY MERGER TO GENWORTH FINANCIAL SECURITIES CORPORATION
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 16 www.finra.org/brokercheck User Guidance Firm Operations
Registrations This section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatory organizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered and licensed, the date the license became effective, and certain information about the firm's SEC registration. This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories. Federal Regulator Status Date Effective SEC Approved 01/21/1982
SEC Registration Questions This firm is registered with the SEC as: A broker-dealer: Yes A broker-dealer and government securities broker or dealer: No A government securities broker or dealer only: No This firm has ceased activity as a government securities broker or dealer: No
Self-Regulatory Organization Status Date Effective FINRA Approved 02/18/1982
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 17 www.finra.org/brokercheck User Guidance Firm Operations
Registrations (continued) U.S. States & Status Date Effective U.S. States & Status Date Effective Territories Territories Alabama Approved 09/24/1998 North Carolina Approved 05/28/1997 Alaska Approved 04/18/1996 North Dakota Approved 05/15/1998 Arizona Approved 08/07/1992 Ohio Approved 09/03/1992 Arkansas Approved 10/24/1997 Oklahoma Approved 03/02/1994 California Approved 01/17/1992 Oregon Approved 10/29/1997 Colorado Approved 09/29/1994 Pennsylvania Approved 10/18/1993 Connecticut Approved 08/08/1995 Puerto Rico Approved 05/20/2004 Delaware Approved 02/17/1998 Rhode Island Approved 04/24/1998 District of Columbia Approved 04/30/1998 South Carolina Approved 02/02/1994 Florida Approved 07/10/1987 South Dakota Approved 04/08/1998 Georgia Approved 08/03/1995 Tennessee Approved 09/30/1998 Hawaii Approved 05/07/1996 Texas Approved 03/26/1993 Idaho Approved 04/06/1998 Utah Approved 09/28/1993 Illinois Approved 04/07/1982 Vermont Approved 06/09/1998 Indiana Approved 04/29/1985 Virgin Islands Approved 05/29/2007 Iowa Approved 09/02/1993 Virginia Approved 05/05/1997 Kansas Approved 11/25/1996 Washington Approved 03/26/1996 Kentucky Approved 03/28/1996 West Virginia Approved 04/01/1998 Louisiana Approved 05/21/1993 Wisconsin Approved 05/22/1989 Maine Approved 06/11/1992 Wyoming Approved 04/07/1998 Maryland Approved 01/03/1994 Massachusetts Approved 04/13/1993 Michigan Approved 11/10/1987 Minnesota Approved 05/14/1997 Mississippi Approved 05/08/1998 Missouri Approved 03/19/1990 Montana Approved 01/01/1994 Nebraska Approved 08/09/1996 Nevada Approved 04/09/1998 New Hampshire Approved 04/17/1998 New Jersey Approved 02/23/1995 New Mexico Approved 08/15/1995 New York Approved 10/30/1984
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 18 www.finra.org/brokercheck User Guidance Firm Operations
Types of Business This section provides the types of business, including non-securities business, the brokerage firm is engaged in or expects to be engaged in. This firm currently conducts 13 types of businesses. Types of Business
Broker or dealer retailing corporate equity securities over-the-counter Broker or dealer selling corporate debt securities Mutual fund retailer Municipal securities broker Broker or dealer selling variable life insurance or annuities Solicitor of time deposits in a financial institution Broker or dealer selling oil and gas interests Put and call broker or dealer or option writer Broker or dealer selling tax shelters or limited partnerships in primary distributions Broker or dealer selling tax shelters or limited partnerships in the secondary market Non-exchange member arranging for transactions in listed securities by exchange member Private placements of securities Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, or credit union
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 19 www.finra.org/brokercheck User Guidance Firm Operations
Clearing Arrangements This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).
Introducing Arrangements
This firm does refer or introduce customers to other brokers and dealers. Name: PERSHING LLC CRD #: 7560 Business Address: ONE PERSHING PLAZA JERSEY CITY, NJ 07399 Effective Date: 03/12/1999 Description: CETERA FINANCIAL SPECIALISTS LLC, A FULLY DISCLOSED INTRODUCING BROKER, UPDATED AND EXECUTED A CLEARING AGREEMENT WITH PERSHING LLC, A BANK OF NEW YORK SECURITIES GROUP COMPANY ON JUNE 26, 2002 FROM THE ORIGINAL AGREEMENT IN MARCH OF 1999. PURSUANT TO SUCH AGREEMENT. CETERA FINANCIAL SPECIALISTS LLC INTRODUCES CUSTOMERS TO PERSHING ON A FULLY DISCLOSED BASIS FOR THE CLEARANCE OF GENERAL SECURITIES BUSINESS.
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 20 www.finra.org/brokercheck User Guidance Firm Operations Industry Arrangements
This firm does have books or records maintained by a third party. Name: MICROSOFT CORPORATION Business Address: ONE MICROSOFT WAY REDMOND, WA 98052 Effective Date: 12/01/2020 Description: THE FIRM WILL BEGIN UTILIZING MICROSOFT CORPORATION OR AN AFFILIATE OF MICROSOFT CORPORATION ("MICROSOFT"), ELECTRONIC STORAGE MEDIA EXCLUSIVELY FOR CERTAIN BOOKS AND RECORDS. Name: SITEQUEST, INC Business Address: 707 W 700 S SUITE 101 WOODS CROSS, UT 94087 Effective Date: 11/01/2020 Description: THE FIRM WILL BEGIN UTILIZING SITEQUEST, INC, ELECTRONIC STORAGE MEDIA EXCLUSIVELY FOR CERTAIN BOOKS AND RECORDS ON OR AFTER NOVEMBER 1, 2020. Name: BIZNEWS24.COM, INC. D/B/A PINPOINT GLOBAL COMMUNICATIONS Business Address: 9 TRAFALGAR SQUARE SUITE 150 NASHUA, NH 03063 Effective Date: 05/01/2020 Description: ELECTRONIC STORAGE MEDIA FOR CERTAIN BOOKS AND RECORDS ON OR AFTER MAY 1, 2020. Name: FMG SUITE, LLC Business Address: 12395 WORLD TRADE DR #200 SAN DIEGO, CA 92128 Effective Date: 03/02/2020 Description: ELECTRONIC RECORD KEEPER OF SUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURES. Name: SMARSH Business Address: 851 SW 6TH AVE. # 800 PORTLAND, OR 97204
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 21 www.finra.org/brokercheck User Guidance Firm Operations Industry Arrangements (continued) Effective Date: 11/01/2015 Description: ELECTRONIC RECORD KEEPER FOR ARCHIVING EMAILS, INSTANT MESSAGES, SOCIAL MEDIA AND TRADE BLOTTERS. Name: ALBRIDGE SOLUTIONS, INC. Business Address: ONE PERSHING PLAZA JERSEY CITY, NJ 07399 Effective Date: 08/31/2015 Description: ELECTRONIC DOCUMENT CAPTURE, IDENTIFICATION, INDEXING AND STORAGE SERVICES Name: DOCUPACE TECHNOLOGIES, INC. Business Address: 2001 S. BARRINGTON AVE. SUITE 215 LOS ANGELES, CA 90025 Effective Date: 07/01/2012 Description: ELECTRONIC DOCUMENT STORAGE AND RECORD RETENTION
Name: EFILECABINET, INC. Business Address: 2989 W. MAPLE LOOP DRIVE SUITE 300 LEHI, UT 84043 Effective Date: 12/27/2011 Description: ELECTRONIC DOCUMENT STORAGE AND RECORD RETENTION
Name: REDTAIL TECHNOLOGY, INC. Business Address: 11291 PYRITES WAY SUITE B GOLD RIVER, CA 95670 Effective Date: 06/01/2011 Description: ELECTRONIC DOCUMENT STORAGE AND RECORD RETENTION & CLIENT RESOURCE MANAGEMENT SYSTEM Name: NATIONAL REGULATORY SERVICES, A DIVISION OF ACCUITY, INC. Business Address: 323 - A MAIN STREET LAKEVILLE, CT 06039 Effective Date: 03/01/2011 Description: BRANCH INSPECTION & ADVERTISING REVIEW MODULES FOR ©2021 FINRA. All rights reserved. Report MONITORINGabout CETERA FINANCIAL AND RECORD SPECIALISTS RETENTION LLC 22 www.finra.org/brokercheck User Guidance Firm Operations
Description:Industry Arrangements (continued)BRANCH INSPECTION & ADVERTISING REVIEW MODULES FOR MONITORING AND RECORD RETENTION Name: BROADRIDGE SECURITIES PROCESSING SOLUTIONS, INC. Business Address: 1981 MARCUS AVENUE LAKE SUCCESS, NY 11042 Effective Date: 06/01/2006 Description: WEB BASED SYSTEM USED TO PRODUCE AND MAINTAIN PRE- APPROVED REPORTS ON CLIENT INVESTMENT HOLDINGS Name: MARKETINGPRO, INC. Business Address: 14525 SW MILLIKAN WAY #78359 BEAVERTON, OR 97005 Effective Date: 06/01/2009 Description: WEB BASED SALES LITERATURE AND RECORD RETENTION SYSTEM
Name: IRON MOUNTAIN INFORMATION MANAGEMENT, LLC Business Address: 4175 CHANDLER DRIVE HANOVER PARK, IL 60133 Effective Date: 01/01/2001 Description: IRON MOUNTAIN MAINTAINS SOME COMPLIANCE, LEGAL, AND CLIENT RECORDS THAT CETERA FINANCIAL SPECIALISTS LLC IS REQUIRED TO RETAIN AFTER TWO YEARS HAVE PASSED SINCE THEY WERE CREATED. Name: VERITAS TECHNOLOGIES, INC. Business Address: 2780 SKYLARK DRIVE SUITE 300 TORRANCE, CA 90278 Effective Date: 01/23/2005 Description: ELECTRONIC RECORD KEEPER FOR ARCHIVING EMAILS, INSTANT MESSAGES AND TRADE BLOTTERS This firm does have accounts, funds, or securities maintained by a third party. Name: PERSHING LLC CRD #: 7560 Business Address: ONE PERSHING PLAZA JERSEY CITY, NJ 07399 Effective Date: 03/12/1999 ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 23 www.finra.org/brokercheck User Guidance Firm Operations Industry Arrangements (continued) Effective Date: 03/12/1999 Description: CETERA FINANCIAL SPECIALISTS LLC, A FULLY DISCLOSED INTRODUCING BROKER, UPDATED AND EXECUTED A CLEARING AGREEMENT WITH PERSHING LLC, A BANK OF NEW YORK SECURITIES GROUP COMPANY ON JUNE 26, 2002 FROM THE ORIGINAL AGREEMENT IN MARCH OF 1999. PURSUANT TO SUCH AGREEMENT. CETERA FINANCIAL SPECIALISTS LLC INTRODUCES CUSTOMERS TO PERSHING ON A FULLY DISCLOSED BASIS FOR THE CLEARANCE OF GENERAL SECURITIES BUSINESS. This firm does have customer accounts, funds, or securities maintained by a third party. Name: PERSHING LLC CRD #: 7560 Business Address: ONE PERSHING PLAZA JERSEY CITY, NJ 07399 Effective Date: 03/12/1999 Description: CETERA FINANCIAL SPECIALISTS LLC, A FULLY DISCLOSED INTRODUCING BROKER, UPDATED AND EXECUTED A CLEARING AGREEMENT WITH PERSHING LLC, A BANK OF NEW YORK SECURITIES GROUP COMPANY, ON JUNE 26, 2002 FROM THE ORIGINAL AGREEMENT IN MARCH OF 1999. PURSUANT TO SUCH AGREEMENT, CETERA FINANCIAL SPECIALISTS LLC INTRODUCES CUSTOMERS TO PERSHING ON A FULLY DISCLOSED BASIS FOR THE CLEARANCE OF GENERAL SECURITIES BUSINESS.
Control Persons/Financing This firm does not have individuals who control its management or policies through agreement.
This firm does not have individuals who wholly or partly finance the firm's business.
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 24 www.finra.org/brokercheck User Guidance Firm Operations
Organization Affiliates This section provides information on control relationships the firm has with other firms in the securities, investment advisory, or banking business.
This firm is, directly or indirectly: · in control of · controlled by · or under common control with the following partnerships, corporations, or other organizations engaged in the securities or investment advisory business. CETERA ADVISORY SERVICES LLC is under common control with the firm. CRD #: 285648 Business Address: 200 N PACIFIC COAST HWY STE 1300 EL SEGUNDO, CA 90245 Effective Date: 11/16/2016 Foreign Entity: No Country: Securities Activities: No Investment Advisory Yes Activities: Description: APPLICANT AND AFFILIATE ARE UNDER COMMON CONTROL OF ARETEC GROUP, INC.
FIRST ALLIED SECURITIES, INC. is under common control with the firm. CRD #: 32444 Business Address: 655 WEST BROADWAY 12TH FLOOR SAN DIEGO, CA 92101 Effective Date: 04/29/2014 Foreign Entity: No Country: Securities Activities: Yes Investment Advisory No Activities: Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF ARETEC GROUP, INC. ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 25 www.finra.org/brokercheck User Guidance Firm Operations
Organization Affiliates (continued) Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF ARETEC GROUP, INC.
CETERA INVESTMENT MANAGEMENT LLC is under common control with the firm. CRD #: 165436 Business Address: 200 N PACIFIC COAST HWY STE 1300 EL SEGUNDO, CA 90245 Effective Date: 01/03/2013 Foreign Entity: No Country: Securities Activities: No Investment Advisory Yes Activities: Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF CETERA FINANCIAL GROUP, INC.
CETERA INVESTMENT SERVICES LLC is under common control with the firm. CRD #: 15340 Business Address: 400 FIRST STREET SOUTH SUITE 300 ST. CLOUD, MN 56301 Effective Date: 04/02/2012 Foreign Entity: No Country: Securities Activities: Yes Investment Advisory No Activities: Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF CETERA FINANCIAL GROUP, INC.
CETERA ADVISORS LLC is under common control with the firm. CRD #: 10299 Business Address: 4600 SOUTH SYRACUSE STREET SUITE 600 DENVER, CO 80237-2769
Effective©2021 FINRA. Date: All rights reserved. Report about04/02/2012 CETERA FINANCIAL SPECIALISTS LLC 26 www.finra.org/brokercheck User Guidance Firm Operations
Organization Affiliates (continued)
Effective Date: 04/02/2012 Foreign Entity: No Country: Securities Activities: Yes Investment Advisory Yes Activities: Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF CETERA FINANCIAL GROUP, INC.
CETERA ADVISOR NETWORKS LLC is under common control with the firm. CRD #: 13572 Business Address: 200 N PACIFIC COAST HWY STE 1300 EL SEGUNDO, CA 90245-5672 Effective Date: 04/02/2012 Foreign Entity: No Country: Securities Activities: Yes Investment Advisory Yes Activities: Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF CETERA FINANCIAL GROUP, INC.
CETERA INVESTMENT ADVISERS LLC is under common control with the firm. CRD #: 105644 Business Address: 1450 AMERICAN LANE 6TH FLOOR, SUITE #650 SCHAUMBURG, IL 60173 Effective Date: 06/02/1998 Foreign Entity: No Country: Securities Activities: No Investment Advisory Yes Activities:
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 27 www.finra.org/brokercheck User Guidance Firm Operations
Organization Affiliates (continued)
Description: APPLICANT AND CONTROL AFFILIATE ARE UNDER COMMON CONTROL OF CETERA FINANCIAL SPECIALISTS SERVICES LLC
This firm is not directly or indirectly, controlled by the following: · bank holding company · national bank · state member bank of the Federal Reserve System · state non-member bank · savings bank or association · credit union · or foreign bank
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 28 www.finra.org/brokercheck User Guidance Disclosure Events
All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal or civil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved. For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm or one of its control affiliates. Further information regarding these events can be found in the subsequent pages of this report. Pending Final On Appeal Regulatory Event 0 11 0 Arbitration N/A 3 N/A
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 29 www.finra.org/brokercheck User Guidance
Disclosure Event Details What you should know about reported disclosure events:
1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includes summary information regarding FINRA arbitration awards in cases where the brokerage firm was named as a respondent. 2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a particular criminal event. 3. Disclosure events in BrokerCheck reports come from different sources: o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firm and a regulator report information for the same event, both versions of the event will appear in the BrokerCheck report. The different versions will be separated by a solid line with the reporting source labeled. 4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final. § A "pending" event involves allegations that have not been proven or formally adjudicated. § An event that is "on appeal" involves allegations that have been adjudicated but are currently being appealed. § A "final" event has been concluded and its resolution is not subject to change. o A final event generally has a disposition of adjudicated, settled or otherwise resolved. § An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter, or (2) an administrative panel in an action brought by a regulator that is contested by the party charged with some alleged wrongdoing. § A "settled" matter generally involves an agreement by the parties to resolve the matter. Please note that firms may choose to settle customer disputes or regulatory matters for business or other reasons. § A "resolved" matter usually involves no payment to the customer and no finding of wrongdoing on the part of the individual broker. Such matters generally involve customer disputes. 5. You may wish to contact the brokerage firm to obtain further information regarding any of the disclosure events contained in this BrokerCheck report. Regulatory - Final This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a state securities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission, foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation or suspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federal contractor. Disclosure 1 of 11 Reporting Source: Regulator Current Status: Final Allegations: THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") ©2021 FINRA. All rights reserved. Report aboutDEEMS CETERA IT APPROPRIATE FINANCIAL SPECIALISTS AND IN LLC THE PUBLIC INTEREST THAT PUBLIC 30 ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AGAINST CETERA ADVISOR NETWORKS LLC, CETERA ADVISORS LLC, CETERA INVESTMENT SERVICES LLC, CETERA FINANCIAL SPECIALISTS LLC, AND CETERA INVESTMENT ADVISERS LLC (TOGETHER, "CETERA ENTITIES" OR "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF CETERA ENTITIES' FAILURE TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PROTECT CUSTOMER RECORDS AND INFORMATION, IN VIOLATION OF RULE 30(A) OF REGULATION S-P ("SAFEGUARDS RULE") AND, WITH RESPECT TO CETERA ADVISORS LLC AND CETERA INVESTMENT ADVISERS LLC, FAILURE TO ADOPT AND IMPLEMENT REASONABLY DESIGNED PROCEDURES FOR REVIEW OF COMMUNICATIONS SENT TO IMPACTED CLIENTS IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. THE SAFEGUARDS RULE REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO: (1) INSURE THE SECURITY AND CONFIDENTIALITY OF CUSTOMER RECORDS AND INFORMATION; (2) PROTECT AGAINST ANY ANTICIPATED THREATS OR HAZARDS TO THE SECURITY OR INTEGRITY OF CUSTOMER RECORDS AND INFORMATION; AND (3) PROTECT AGAINST UNAUTHORIZED ACCESS TO OR USE OF CUSTOMER RECORDS OR INFORMATION THAT COULD RESULT IN SUBSTANTIAL HARM OR INCONVENIENCE TO ANY CUSTOMER. CETERA ENTITIES ARE REGISTERED WITH THE COMMISSION AS BROKER- DEALERS, INVESTMENT ADVISERS, OR BOTH. BETWEEN NOVEMBER 2017 AND JUNE 2020, EMAIL ACCOUNTS OF OVER 60 CETERA ENTITIES' PERSONNEL WERE TAKEN OVER BY UNAUTHORIZED THIRD PARTIES RESULTING IN THE EXPOSURE OF OVER 4,388 OF CETERA ENTITIES' CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION ("PII") STORED IN THE COMPROMISED EMAIL ACCOUNTS. AT THE TIME, NONE OF THESE ACCOUNTS HAD MULTI-FACTOR AUTHENTICATION ("MFA") TURNED ON, EVEN THOUGH CETERA ENTITIES' OWN POLICIES REQUIRED MFA "WHEREVER POSSIBLE," BEGINNING IN 2018. ALTHOUGH THESE EMAIL ACCOUNT TAKEOVERS DO NOT APPEAR TO HAVE RESULTED IN ANY UNAUTHORIZED TRADES OR TRANSFERS IN BROKERAGE CUSTOMERS' OR ADVISORY CLIENTS' ("CUSTOMERS") ACCOUNTS, CETERA ENTITIES VIOLATED THE SAFEGUARDS RULE BECAUSE THEIR POLICIES AND PROCEDURES TO PROTECT CUSTOMER INFORMATION AND TO PREVENT AND RESPOND TO CYBERSECURITY INCIDENTS WERE NOT REASONABLY DESIGNED TO MEET THESE OBJECTIVES, SPECIFICALLY AS APPLIED TO INDEPENDENT CONTRACTOR REPRESENTATIVES AND OFFSHORE CONTRACTORS. CETERA ENTITIES HAD A SIGNIFICANT NUMBER OF SECURITY TOOLS AT THEIR DISPOSAL THAT ALLOWED THEM TO IMPLEMENT CONTROLS THAT WOULD MITIGATE THESE HIGHER RISKS. HOWEVER, CETERA ENTITIES FAILED TO USE THESE TOOLS IN THE MANNER TAILORED TO THEIR BUSINESS, EXPOSING THEIR CUSTOMERS' PII TO UNREASONABLE RISKS. SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER REQUIRE A REGISTERED INVESTMENT ADVISER, OR AN INVESTMENT ADVISER REQUIRED TO REGISTER, TO ADOPT AND IMPLEMENT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS, BY THE ADVISER OR ITS SUPERVISED PERSONS, OF THE ADVISERS ACT AND THE RULES ADOPTED BY THE COMMISSION THEREUNDER. CETERA ADVISORS LLC ("CETERA ADVISORS") AND CETERA INVESTMENT ADVISERS LLC ("CETERA INVESTMENT ADVISERS") VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER BY FAILING TO ADOPT AND IMPLEMENT REASONABLY DESIGNED POLICIES AND PROCEDURES REGARDING REVIEW OF COMMUNICATIONS TO ADVISORY CLIENTS. THIS FAILURE RESULTED IN SENDING BREACH NOTIFICATIONS TO THE FIRMS' CLIENTS THAT INCLUDED MISLEADING TEMPLATE LANGUAGE SUGGESTING THAT THE NOTIFICATIONS WERE ISSUED MUCH SOONER THAN THEY ACTUALLY WERE AFTER THE DISCOVERY OF THE INCIDENTS. www.finra.org/brokercheck User Guidance
Allegations: THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AGAINST CETERA ADVISOR NETWORKS LLC, CETERA ADVISORS LLC, CETERA INVESTMENT SERVICES LLC, CETERA FINANCIAL SPECIALISTS LLC, AND CETERA INVESTMENT ADVISERS LLC (TOGETHER, "CETERA ENTITIES" OR "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF CETERA ENTITIES' FAILURE TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PROTECT CUSTOMER RECORDS AND INFORMATION, IN VIOLATION OF RULE 30(A) OF REGULATION S-P ("SAFEGUARDS RULE") AND, WITH RESPECT TO CETERA ADVISORS LLC AND CETERA INVESTMENT ADVISERS LLC, FAILURE TO ADOPT AND IMPLEMENT REASONABLY DESIGNED PROCEDURES FOR REVIEW OF COMMUNICATIONS SENT TO IMPACTED CLIENTS IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. THE SAFEGUARDS RULE REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO: (1) INSURE THE SECURITY AND CONFIDENTIALITY OF CUSTOMER RECORDS AND INFORMATION; (2) PROTECT AGAINST ANY ANTICIPATED THREATS OR HAZARDS TO THE SECURITY OR INTEGRITY OF CUSTOMER RECORDS AND INFORMATION; AND (3) PROTECT AGAINST UNAUTHORIZED ACCESS TO OR USE OF CUSTOMER RECORDS OR INFORMATION THAT COULD RESULT IN SUBSTANTIAL HARM OR INCONVENIENCE TO ANY CUSTOMER. CETERA ENTITIES ARE REGISTERED WITH THE COMMISSION AS BROKER- DEALERS, INVESTMENT ADVISERS, OR BOTH. BETWEEN NOVEMBER 2017 AND JUNE 2020, EMAIL ACCOUNTS OF OVER 60 CETERA ENTITIES' PERSONNEL WERE TAKEN OVER BY UNAUTHORIZED THIRD PARTIES RESULTING IN THE EXPOSURE OF OVER 4,388 OF CETERA ENTITIES' CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION ("PII") STORED IN THE COMPROMISED EMAIL ACCOUNTS. AT THE TIME, NONE OF THESE ACCOUNTS HAD MULTI-FACTOR AUTHENTICATION ("MFA") TURNED ON, EVEN THOUGH CETERA ENTITIES' OWN POLICIES REQUIRED MFA "WHEREVER POSSIBLE," BEGINNING IN 2018. ALTHOUGH THESE EMAIL ACCOUNT TAKEOVERS DO NOT APPEAR TO HAVE RESULTED IN ANY UNAUTHORIZED TRADES OR TRANSFERS IN BROKERAGE CUSTOMERS' OR ADVISORY CLIENTS' ("CUSTOMERS") ACCOUNTS, CETERA ENTITIES VIOLATED THE SAFEGUARDS RULE BECAUSE THEIR POLICIES AND PROCEDURES TO PROTECT CUSTOMER INFORMATION AND TO PREVENT AND RESPOND TO CYBERSECURITY INCIDENTS WERE NOT REASONABLY DESIGNED TO MEET THESE OBJECTIVES, SPECIFICALLY AS APPLIED TO ©2021 FINRA. All rights reserved. Report aboutINDEPENDENT CETERA FINANCIAL CONTRACTOR SPECIALISTS REPRESENTATIVES LLC AND OFFSHORE 31 CONTRACTORS. CETERA ENTITIES HAD A SIGNIFICANT NUMBER OF SECURITY TOOLS AT THEIR DISPOSAL THAT ALLOWED THEM TO IMPLEMENT CONTROLS THAT WOULD MITIGATE THESE HIGHER RISKS. HOWEVER, CETERA ENTITIES FAILED TO USE THESE TOOLS IN THE MANNER TAILORED TO THEIR BUSINESS, EXPOSING THEIR CUSTOMERS' PII TO UNREASONABLE RISKS. SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER REQUIRE A REGISTERED INVESTMENT ADVISER, OR AN INVESTMENT ADVISER REQUIRED TO REGISTER, TO ADOPT AND IMPLEMENT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS, BY THE ADVISER OR ITS SUPERVISED PERSONS, OF THE ADVISERS ACT AND THE RULES ADOPTED BY THE COMMISSION THEREUNDER. CETERA ADVISORS LLC ("CETERA ADVISORS") AND CETERA INVESTMENT ADVISERS LLC ("CETERA INVESTMENT ADVISERS") VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER BY FAILING TO ADOPT AND IMPLEMENT REASONABLY DESIGNED POLICIES AND PROCEDURES REGARDING REVIEW OF COMMUNICATIONS TO ADVISORY CLIENTS. THIS FAILURE RESULTED IN SENDING BREACH NOTIFICATIONS TO THE FIRMS' CLIENTS THAT INCLUDED MISLEADING TEMPLATE LANGUAGE SUGGESTING THAT THE NOTIFICATIONS WERE ISSUED MUCH SOONER THAN THEY ACTUALLY WERE AFTER THE DISCOVERY OF THE INCIDENTS. THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AGAINST CETERA ADVISOR NETWORKS LLC, CETERA ADVISORS LLC, CETERA INVESTMENT SERVICES LLC, CETERA FINANCIAL SPECIALISTS LLC, AND CETERA INVESTMENT ADVISERS LLC (TOGETHER, "CETERA ENTITIES" OR "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF CETERA ENTITIES' FAILURE TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PROTECT CUSTOMER RECORDS AND INFORMATION, IN VIOLATION OF RULE 30(A) OF REGULATION S-P ("SAFEGUARDS RULE") AND, WITH RESPECT TO CETERA ADVISORS LLC AND CETERA INVESTMENT ADVISERS LLC, FAILURE TO ADOPT AND IMPLEMENT REASONABLY DESIGNED PROCEDURES FOR REVIEW OF COMMUNICATIONS SENT TO IMPACTED CLIENTS IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. THE SAFEGUARDS RULE REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO: (1) INSURE THE SECURITY AND CONFIDENTIALITY OF CUSTOMER RECORDS AND INFORMATION; (2) PROTECT AGAINST ANY ANTICIPATED THREATS OR HAZARDS TO THE SECURITY OR INTEGRITY OF CUSTOMER RECORDS AND INFORMATION; AND (3) PROTECT AGAINST UNAUTHORIZED ACCESS TO OR USE OF CUSTOMER RECORDS OR INFORMATION THAT COULD RESULT IN SUBSTANTIAL HARM OR INCONVENIENCE TO ANY CUSTOMER. CETERA ENTITIES ARE REGISTERED WITH THE COMMISSION AS BROKER- DEALERS, INVESTMENT ADVISERS, OR BOTH. BETWEEN NOVEMBER 2017 AND JUNE 2020, EMAIL ACCOUNTS OF OVER 60 CETERA ENTITIES' PERSONNEL WERE TAKEN OVER BY UNAUTHORIZED THIRD PARTIES RESULTING IN THE EXPOSURE OF OVER 4,388 OF CETERA ENTITIES' CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION ("PII") STORED IN THE COMPROMISED EMAIL ACCOUNTS. AT THE TIME, NONE OF THESE ACCOUNTS HAD MULTI-FACTOR AUTHENTICATION ("MFA") TURNED ON, EVEN THOUGH CETERA ENTITIES' OWN POLICIES REQUIRED MFA "WHEREVER POSSIBLE," BEGINNING IN 2018. ALTHOUGH THESE EMAIL ACCOUNT TAKEOVERS DO NOT APPEAR TO HAVE RESULTED IN ANY UNAUTHORIZED TRADES OR TRANSFERS IN BROKERAGE CUSTOMERS' www.finra.org/brokercheck OR ADVISORY CLIENTS' ("CUSTOMERS") ACCOUNTS, CETERA ENTITIES User Guidance VIOLATED THE SAFEGUARDS RULE BECAUSE THEIR POLICIES AND PROCEDURES TO PROTECT CUSTOMER INFORMATION AND TO PREVENT AND RESPOND TO CYBERSECURITY INCIDENTS WERE NOT REASONABLY DESIGNED TO MEET THESE OBJECTIVES, SPECIFICALLY AS APPLIED TO INDEPENDENT CONTRACTOR REPRESENTATIVES AND OFFSHORE CONTRACTORS. CETERA ENTITIES HAD A SIGNIFICANT NUMBER OF SECURITY TOOLS AT THEIR DISPOSAL THAT ALLOWED THEM TO IMPLEMENT CONTROLS THAT WOULD MITIGATE THESE HIGHER RISKS. HOWEVER, CETERA ENTITIES FAILED TO USE THESE TOOLS IN THE MANNER TAILORED TO THEIR BUSINESS, EXPOSING THEIR CUSTOMERS' PII TO UNREASONABLE RISKS. SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER REQUIRE A REGISTERED INVESTMENT ADVISER, OR AN INVESTMENT ADVISER REQUIRED TO REGISTER, TO ADOPT AND IMPLEMENT WRITTEN COMPLIANCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATIONS, BY THE ADVISER OR ITS SUPERVISED PERSONS, OF THE ADVISERS ACT AND THE RULES ADOPTED BY THE COMMISSION THEREUNDER. CETERA ADVISORS LLC ("CETERA ADVISORS") AND CETERA INVESTMENT ADVISERS LLC ("CETERA INVESTMENT ADVISERS") VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER BY FAILING TO ADOPT AND IMPLEMENT REASONABLY DESIGNED POLICIES AND PROCEDURES REGARDING REVIEW OF COMMUNICATIONS TO ADVISORY CLIENTS. THIS FAILURE RESULTED IN SENDING BREACH NOTIFICATIONS TO THE FIRMS' CLIENTS THAT INCLUDED MISLEADING TEMPLATE LANGUAGE SUGGESTING THAT THE NOTIFICATIONS WERE ISSUED MUCH SOONER THAN THEY ACTUALLY WERE AFTER THE DISCOVERY OF THE INCIDENTS. Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION Date Initiated: 08/30/2021 Docket/Case Number: 3-20490
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Cease and Desist Sought: Other Sanction(s)/Relief Sought:
Resolution: Order Resolution Date: 08/30/2021 Does the order constitute a Yes final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or ©2021deceptive FINRA. conduct? All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 32 www.finra.org/brokercheck User Guidance
Does the order constitute a Yes final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $300,000.00 Cease and Desist/Injunction Other Sanctions Ordered: Sanction Details: CETERA FINANCIAL SPECIALISTS LLC IS CENSURED; ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P; AND SHALL PAY A CIVIL MONEY PENALTY JOINTLY AND SEVERALLY IN THE AMOUNT OF $300,000 TO THE COMMISSION. Regulator Statement RESPONDENT CETERA FINANCIAL SPECIALISTS LLC HAS SUBMITTED AN OFFER OF SETTLEMENT, WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. CETERA FINANCIAL SPECIALISTS LLC WILLFULLY VIOLATED THE SAFEGUARDS RULE, WHICH REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES THAT ARE REASONABLY DESIGNED TO SAFEGUARD CUSTOMER RECORDS AND INFORMATION. ACCORDINGLY, IT IS HEREBY ORDERED THAT THE CETERA FINANCIAL SPECIALISTS LLC CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P; IS CENSURED; AND SHALL PAY A CIVIL MONEY PENALTY JOINTLY AND SEVERALLY IN THE AMOUNT OF $300,000 TO THE COMMISSION. i Reporting Source: Firm Current Status: Final Allegations: THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), AGAINST CETERA ADVISOR NETWORKS LLC, CETERA ADVISORS LLC, CETERA INVESTMENT SERVICES LLC, CETERA FINANCIAL SPECIALISTS LLC, AND CETERA INVESTMENT ADVISERS LLC (TOGETHER, "CETERA ENTITIES" OR "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF CETERA ENTITIES' FAILURE TO ©2021 FINRA. All rights reserved. Report aboutADOPT CETERA WRITTEN FINANCIAL POLICIES SPECIALISTS AND LLC PROCEDURES REASONABLY DESIGNED 33 TO PROTECT CUSTOMER RECORDS AND INFORMATION, IN VIOLATION OF RULE 30(A) OF REGULATION S-P ("SAFEGUARDS RULE") AND, WITH RESPECT TO CETERA ADVISORS LLC AND CETERA INVESTMENT ADVISERS LLC, FAILURE TO ADOPT AND IMPLEMENT REASONABLY DESIGNED PROCEDURES FOR REVIEW OF COMMUNICATIONS SENT TO IMPACTED CLIENTS IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. THE SAFEGUARDS RULE REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO: (1) INSURE THE SECURITY AND CONFIDENTIALITY OF CUSTOMER RECORDS AND INFORMATION; (2) PROTECT AGAINST ANY ANTICIPATED THREATS OR HAZARDS TO THE SECURITY OR INTEGRITY OF CUSTOMER RECORDS AND INFORMATION; AND (3) PROTECT AGAINST UNAUTHORIZED ACCESS TO OR USE OF CUSTOMER RECORDS OR INFORMATION THAT COULD RESULT IN SUBSTANTIAL HARM OR INCONVENIENCE TO ANY CUSTOMER. CETERA ENTITIES ARE REGISTERED WITH THE COMMISSION AS BROKER- DEALERS, INVESTMENT ADVISERS, OR BOTH. BETWEEN NOVEMBER 2017 AND JUNE 2020, EMAIL ACCOUNTS OF OVER 60 CETERA ENTITIES' PERSONNEL WERE TAKEN OVER BY UNAUTHORIZED THIRD PARTIES RESULTING IN THE EXPOSURE OF OVER 4,388 OF CETERA ENTITIES' CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION ("PII") STORED IN THE COMPROMISED EMAIL ACCOUNTS. AT THE TIME, NONE OF THESE ACCOUNTS HAD MULTI-FACTOR AUTHENTICATION ("MFA") TURNED ON, EVEN THOUGH CETERA ENTITIES' OWN POLICIES REQUIRED MFA "WHEREVER POSSIBLE," BEGINNING IN 2018. ALTHOUGH THESE EMAIL ACCOUNT TAKEOVERS DO NOT APPEAR TO HAVE RESULTED IN ANY UNAUTHORIZED TRADES OR TRANSFERS IN BROKERAGE CUSTOMERS' OR ADVISORY CLIENTS' ("CUSTOMERS") ACCOUNTS, CETERA ENTITIES VIOLATED THE SAFEGUARDS RULE BECAUSE THEIR POLICIES AND PROCEDURES TO PROTECT CUSTOMER INFORMATION AND TO PREVENT AND RESPOND TO CYBERSECURITY INCIDENTS WERE NOT REASONABLY DESIGNED TO MEET THESE OBJECTIVES, SPECIFICALLY AS APPLIED TO INDEPENDENT CONTRACTOR REPRESENTATIVES AND OFFSHORE CONTRACTORS. CETERA ENTITIES HAD A SIGNIFICANT NUMBER OF SECURITY TOOLS AT THEIR DISPOSAL THAT ALLOWED THEM TO IMPLEMENT CONTROLS THAT WOULD MITIGATE THESE HIGHER RISKS. HOWEVER, CETERA ENTITIES FAILED TO USE THESE TOOLS IN THE MANNER TAILORED TO THEIR BUSINESS, EXPOSING THEIR CUSTOMERS' PII TO UNREASONABLE RISKS. THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 www.finra.org/brokercheck ("ADVISERS ACT"), AGAINST CETERA ADVISOR NETWORKS LLC, CETERA User Guidance ADVISORS LLC, CETERA INVESTMENT SERVICES LLC, CETERA FINANCIAL SPECIALISTS LLC, AND CETERA INVESTMENT ADVISERS LLC (TOGETHER, "CETERA ENTITIES" OR "RESPONDENTS"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUT OF CETERA ENTITIES' FAILURE TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PROTECT CUSTOMER RECORDS AND INFORMATION, IN VIOLATION OF RULE 30(A) OF REGULATION S-P ("SAFEGUARDS RULE") AND, WITH RESPECT TO CETERA ADVISORS LLC AND CETERA INVESTMENT ADVISERS LLC, FAILURE TO ADOPT AND IMPLEMENT REASONABLY DESIGNED PROCEDURES FOR REVIEW OF COMMUNICATIONS SENT TO IMPACTED CLIENTS IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. THE SAFEGUARDS RULE REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO: (1) INSURE THE SECURITY AND CONFIDENTIALITY OF CUSTOMER RECORDS AND INFORMATION; (2) PROTECT AGAINST ANY ANTICIPATED THREATS OR HAZARDS TO THE SECURITY OR INTEGRITY OF CUSTOMER RECORDS AND INFORMATION; AND (3) PROTECT AGAINST UNAUTHORIZED ACCESS TO OR USE OF CUSTOMER RECORDS OR INFORMATION THAT COULD RESULT IN SUBSTANTIAL HARM OR INCONVENIENCE TO ANY CUSTOMER. CETERA ENTITIES ARE REGISTERED WITH THE COMMISSION AS BROKER- DEALERS, INVESTMENT ADVISERS, OR BOTH. BETWEEN NOVEMBER 2017 AND JUNE 2020, EMAIL ACCOUNTS OF OVER 60 CETERA ENTITIES' PERSONNEL WERE TAKEN OVER BY UNAUTHORIZED THIRD PARTIES RESULTING IN THE EXPOSURE OF OVER 4,388 OF CETERA ENTITIES' CUSTOMERS' PERSONALLY IDENTIFIABLE INFORMATION ("PII") STORED IN THE COMPROMISED EMAIL ACCOUNTS. AT THE TIME, NONE OF THESE ACCOUNTS HAD MULTI-FACTOR AUTHENTICATION ("MFA") TURNED ON, EVEN THOUGH CETERA ENTITIES' OWN POLICIES REQUIRED MFA "WHEREVER POSSIBLE," BEGINNING IN 2018. ALTHOUGH THESE EMAIL ACCOUNT TAKEOVERS DO NOT APPEAR TO HAVE RESULTED IN ANY UNAUTHORIZED TRADES OR TRANSFERS IN BROKERAGE CUSTOMERS' OR ADVISORY CLIENTS' ("CUSTOMERS") ACCOUNTS, CETERA ENTITIES VIOLATED THE SAFEGUARDS RULE BECAUSE THEIR POLICIES AND PROCEDURES TO PROTECT CUSTOMER INFORMATION AND TO PREVENT AND RESPOND TO CYBERSECURITY INCIDENTS WERE NOT REASONABLY DESIGNED TO MEET THESE OBJECTIVES, SPECIFICALLY AS APPLIED TO INDEPENDENT CONTRACTOR REPRESENTATIVES AND OFFSHORE CONTRACTORS. CETERA ENTITIES HAD A SIGNIFICANT NUMBER OF SECURITY TOOLS AT THEIR DISPOSAL THAT ALLOWED THEM TO IMPLEMENT CONTROLS THAT WOULD MITIGATE THESE HIGHER RISKS. HOWEVER, CETERA ENTITIES FAILED TO USE THESE TOOLS IN THE MANNER TAILORED TO THEIR BUSINESS, EXPOSING THEIR CUSTOMERS' PII TO UNREASONABLE RISKS. Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION Date Initiated: 08/30/2021
©2021Docket/Case FINRA. All Number:rights reserved. Report about3-20490 CETERA FINANCIAL SPECIALISTS LLC 34 www.finra.org/brokercheck User Guidance
Docket/Case Number: 3-20490
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Cease and Desist Sought: Other Sanction(s)/Relief Sought:
Resolution: Order Resolution Date: 08/30/2021 Sanctions Ordered: Censure Monetary/Fine $300,000.00 Cease and Desist/Injunction Other Sanctions Ordered: Sanction Details: CETERA FINANCIAL SPECIALISTS LLC IS CENSURED; ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P; AND SHALL PAY A CIVIL MONEY PENALTY JOINTLY AND SEVERALLY IN THE AMOUNT OF $300,000 TO THE COMMISSION. Firm Statement RESPONDENT CETERA FINANCIAL SPECIALISTS LLC HAS SUBMITTED AN OFFER OF SETTLEMENT, WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. CETERA FINANCIAL SPECIALISTS LLC WILLFULLY VIOLATED THE SAFEGUARDS RULE, WHICH REQUIRES EVERY BROKER-DEALER AND EVERY INVESTMENT ADVISER REGISTERED WITH THE COMMISSION TO ADOPT WRITTEN POLICIES AND PROCEDURES THAT ARE REASONABLY DESIGNED TO SAFEGUARD CUSTOMER RECORDS AND INFORMATION. "WILLFULLY," FOR PURPOSES OF IMPOSING RELIEF UNDER SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 203(E) OF THE INVESTMENT ADVISERS ACT OF 1940, MEANS NO MORE THAN THAT THE PERSON CHARGED WITH THE DUTY KNOWS WHAT HE IS DOING. THERE IS NO REQUIREMENT THAT THE ACTOR ALSO BE AWARE THAT HE IS VIOLATING ONE OF THE RULES OR ACTS. ACCORDINGLY, IT IS HEREBY ORDERED THAT THE CETERA FINANCIAL SPECIALISTS LLC CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P; IS CENSURED; AND SHALL PAY A CIVIL MONEY PENALTY JOINTLY AND SEVERALLY IN THE AMOUNT OF $300,000 TO THE COMMISSION. i Disclosure 2 of 11
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 35 www.finra.org/brokercheck User Guidance
Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO SUPERVISE CERTAIN PRIVATE SECURITIES TRANSACTIONS OF DUALLY- REGISTERED REPRESENTATIVES (DRRS) WHO WERE ASSOCIATED WITH OUTSIDE REGISTERED INVESTMENTS ADVISORS (RIAS) AND HAD UNREASONABLE SUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO SUPERVISE PRIVATE SECURITIES TRANSACTIONS THAT THE DRRS RECOMMENDED THROUGH THE OUTSIDE RIAS. THE FINDINGS STATED THAT THE FIRM WAS AWARE OF THE SUPERVISORY DEFICIENCIES AS THEY WERE IDENTIFIED IN SECURITIES AND EXCHANGE COMMISSION (SEC) EXAMINATIONS, YET, DESPITE SEVERAL EFFORTS TO ADDRESS SUCH DEFICIENCIES, IT FAILED TO IMPLEMENT SYSTEMS AND PROCEDURES TO REASONABLY SUPERVISE THE TRANSACTIONS. THE FIRM ALSO INITIATED A PROJECT TO OBTAIN THE INFORMATION NECESSARY TO SUPERVISE OUTSIDE RIA TRANSACTIONS FOR DRRS. THIS PROJECT, HOWEVER, WAS NOT COMPLETED AND THE AUTOMATED SYSTEM FOR OUTSIDE RIA TRANSACTION REVIEW WAS NOT IMPLEMENTED. THE FIRM ADOPTED SUPERVISORY PROCEDURES FOR OUTSIDE RIA TRANSACTIONS THAT REQUIRED ITS REPRESENTATIVES TO PROVIDE, ON A MONTHLY BASIS, A SPREADSHEET FOR ALL TRANSACTIONS CONDUCTED THROUGH THE RIA. THE PROCEDURES DID NOT DESCRIBE WHEN THE FIRM WOULD REVIEW THE TRANSACTIONS. IN PRACTICE, THE FIRM'S REVIEWS WERE NOT REASONABLE BECAUSE THEY WERE OFTEN DELAYED FOR MONTHS, IN SOME INSTANCES UP TO 13 MONTHS, AFTER THE TRANSACTIONS OCCURRED. IN ADDITION, THE FIRM'S RECORDS EVIDENCING ITS REVIEW REVEALED THERE WERE MONTH-LONG GAPS WHERE TRANSACTIONS WERE NOT REVIEWED. EVEN WHEN THE SPREADSHEETS WERE MANUALLY REVIEWED, THE REVIEW WAS NOT REASONABLE BECAUSE THE SPREADSHEETS DID NOT CAPTURE THE CUSTOMER-SPECIFIC INFORMATION, SUCH AS NET WORTH OR INCOME, NECESSARY TO REVIEW THE TRANSACTIONS FOR SUITABILITY. THE FINDINGS ALSO STATED THAT DUE TO THE FIRM'S SUPERVISORY FAILURES, IT FAILED TO RECORD DRR PRIVATE SECURITIES TRANSACTIONS CONDUCTED THROUGH ITS OUTSIDE RIAS ON ITS BOOKS AND RECORDS. Initiated By: FINRA Date Initiated: 12/15/2020 Docket/Case Number: 2015046716901
Principal Product Type: No Product Other Product Type(s): ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 36 www.finra.org/brokercheck User Guidance
Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 12/15/2020 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $100,000.00 Other Sanctions Ordered: CERTIFICATION Sanction Details: THE FIRM WAS CENSURED, FINED $100,000 AND ORDERED TO REVIEW AND REVISE, AS NECESSARY, THEIR SYSTEMS, POLICIES AND PROCEDURES WITH RESPECT TO THE SUPERVISION OF THEIR DUALLY- REGISTERED REPRESENTATIVES' (DRRS) SECURITIES TRANSACTIONS AND WITHIN 90 DAYS CERTIFY THAT IT HAS ENGAGED IN THE REVIEW AND THAT THEY HAVE ESTABLISHED AND IMPLEMENTED SYSTEMS, POLICIES AND PROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE FINRA RULES. FINE PAID IN FULL ON JANUARY 27, 2021. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO SUPERVISE CERTAIN PRIVATE SECURITIES TRANSACTIONS OF DUALLY- REGISTERED REPRESENTATIVES (DRRS) WHO WERE ASSOCIATED WITH OUTSIDE REGISTERED INVESTMENTS ADVISORS (RIAS) AND HAD UNREASONABLE SUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO SUPERVISE PRIVATE SECURITIES TRANSACTIONS THAT THE DRRS RECOMMENDED THROUGH THE OUTSIDE RIAS. THE FINDINGS STATED THAT THE FIRM WAS AWARE OF THE SUPERVISORY DEFICIENCIES AS THEY WERE IDENTIFIED IN SECURITIES AND EXCHANGE COMMISSION (SEC) EXAMINATIONS, YET, DESPITE ©2021 FINRA. All rights reserved. Report aboutSEVERAL CETERA EFFORTS FINANCIAL SPECIALISTSTO ADDRESS LLC SUCH DEFICIENCIES, IT FAILED TO 37 IMPLEMENT SYSTEMS AND PROCEDURES TO REASONABLY SUPERVISE THE TRANSACTIONS. THE FIRM ALSO INITIATED A PROJECT TO OBTAIN THE INFORMATION NECESSARY TO SUPERVISE OUTSIDE RIA TRANSACTIONS FOR DRRS. THIS PROJECT, HOWEVER, WAS NOT COMPLETED AND THE AUTOMATED SYSTEM FOR OUTSIDE RIA TRANSACTION REVIEW WAS NOT IMPLEMENTED. THE FIRM ADOPTED SUPERVISORY PROCEDURES FOR OUTSIDE RIA TRANSACTIONS THAT REQUIRED ITS REPRESENTATIVES TO PROVIDE, ON A MONTHLY BASIS, A SPREADSHEET FOR ALL TRANSACTIONS CONDUCTED THROUGH THE RIA. THE PROCEDURES DID NOT DESCRIBE WHEN THE FIRM WOULD REVIEW THE TRANSACTIONS. IN PRACTICE, THE FIRM'S REVIEWS WERE NOT REASONABLE BECAUSE THEY WERE OFTEN DELAYED FOR MONTHS, IN SOME INSTANCES UP TO 13 MONTHS, AFTER THE TRANSACTIONS OCCURRED. IN ADDITION, THE FIRM'S RECORDS EVIDENCING ITS REVIEW REVEALED THERE WERE MONTH-LONG GAPS WHERE TRANSACTIONS WERE NOT REVIEWED. EVEN WHEN THE SPREADSHEETS WERE MANUALLY REVIEWED, THE REVIEW WAS NOT REASONABLE BECAUSE THE SPREADSHEETS DID NOT CAPTURE THE CUSTOMER-SPECIFIC INFORMATION, SUCH AS NET WORTH OR INCOME, NECESSARY TO REVIEW THE TRANSACTIONS FOR SUITABILITY. THE FINDINGS ALSO STATED THAT DUE TO THE FIRM'S SUPERVISORY FAILURES, IT FAILED TO RECORD DRR PRIVATE SECURITIES TRANSACTIONS CONDUCTED THROUGH ITS OUTSIDE RIAS ON ITS BOOKS AND RECORDS. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO SUPERVISE CERTAIN PRIVATE SECURITIES TRANSACTIONS OF DUALLY- REGISTERED REPRESENTATIVES (DRRS) WHO WERE ASSOCIATED WITH OUTSIDE REGISTERED INVESTMENTS ADVISORS (RIAS) AND HAD UNREASONABLE SUPERVISORY SYSTEMS AND WRITTEN SUPERVISORY PROCEDURES (WSPS) TO SUPERVISE PRIVATE SECURITIES www.finra.org/brokercheck TRANSACTIONS THAT THE DRRS RECOMMENDED THROUGH THE OUTSIDE User Guidance RIAS. THE FINDINGS STATED THAT THE FIRM WAS AWARE OF THE SUPERVISORY DEFICIENCIES AS THEY WERE IDENTIFIED IN SECURITIES AND EXCHANGE COMMISSION (SEC) EXAMINATIONS, YET, DESPITE SEVERAL EFFORTS TO ADDRESS SUCH DEFICIENCIES, IT FAILED TO IMPLEMENT SYSTEMS AND PROCEDURES TO REASONABLY SUPERVISE THE TRANSACTIONS. THE FIRM ALSO INITIATED A PROJECT TO OBTAIN THE INFORMATION NECESSARY TO SUPERVISE OUTSIDE RIA TRANSACTIONS FOR DRRS. THIS PROJECT, HOWEVER, WAS NOT COMPLETED AND THE AUTOMATED SYSTEM FOR OUTSIDE RIA TRANSACTION REVIEW WAS NOT IMPLEMENTED. THE FIRM ADOPTED SUPERVISORY PROCEDURES FOR OUTSIDE RIA TRANSACTIONS THAT REQUIRED ITS REPRESENTATIVES TO PROVIDE, ON A MONTHLY BASIS, A SPREADSHEET FOR ALL TRANSACTIONS CONDUCTED THROUGH THE RIA. THE PROCEDURES DID NOT DESCRIBE WHEN THE FIRM WOULD REVIEW THE TRANSACTIONS. IN PRACTICE, THE FIRM'S REVIEWS WERE NOT REASONABLE BECAUSE THEY WERE OFTEN DELAYED FOR MONTHS, IN SOME INSTANCES UP TO 13 MONTHS, AFTER THE TRANSACTIONS OCCURRED. IN ADDITION, THE FIRM'S RECORDS EVIDENCING ITS REVIEW REVEALED THERE WERE MONTH-LONG GAPS WHERE TRANSACTIONS WERE NOT REVIEWED. EVEN WHEN THE SPREADSHEETS WERE MANUALLY REVIEWED, THE REVIEW WAS NOT REASONABLE BECAUSE THE SPREADSHEETS DID NOT CAPTURE THE CUSTOMER-SPECIFIC INFORMATION, SUCH AS NET WORTH OR INCOME, NECESSARY TO REVIEW THE TRANSACTIONS FOR SUITABILITY. THE FINDINGS ALSO STATED THAT DUE TO THE FIRM'S SUPERVISORY FAILURES, IT FAILED TO RECORD DRR PRIVATE SECURITIES TRANSACTIONS CONDUCTED THROUGH ITS OUTSIDE RIAS ON ITS BOOKS AND RECORDS. Initiated By: FINRA Date Initiated: 12/15/2020 Docket/Case Number: 2015046716901
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 12/15/2020 Sanctions Ordered: Censure Monetary/Fine $100,000.00 Other Sanctions Ordered: CERTIFICATION Sanction Details: THE FIRM WAS CENSURED, FINED $100,000 AND ORDERED TO REVIEW ©2021 FINRA. All rights reserved. Report aboutAND CETERA REVISE, FINANCIAL AS NECESSARY, SPECIALISTS THEIR LLC SYSTEMS, POLICIES AND 38 PROCEDURES WITH RESPECT TO THE SUPERVISION OF THEIR DUALLY- REGISTERED REPRESENTATIVES' (DRRS) SECURITIES TRANSACTIONS AND WITHIN 90 DAYS CERTIFY THAT IT HAS ENGAGED IN THE REVIEW AND THAT THEY HAVE ESTABLISHED AND IMPLEMENTED SYSTEMS, POLICIES AND PROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE FINRA RULES. www.finra.org/brokercheck User Guidance
Sanction Details: THE FIRM WAS CENSURED, FINED $100,000 AND ORDERED TO REVIEW AND REVISE, AS NECESSARY, THEIR SYSTEMS, POLICIES AND PROCEDURES WITH RESPECT TO THE SUPERVISION OF THEIR DUALLY- REGISTERED REPRESENTATIVES' (DRRS) SECURITIES TRANSACTIONS AND WITHIN 90 DAYS CERTIFY THAT IT HAS ENGAGED IN THE REVIEW AND THAT THEY HAVE ESTABLISHED AND IMPLEMENTED SYSTEMS, POLICIES AND PROCEDURES THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE FINRA RULES. i Disclosure 3 of 11 Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO CONSIDER WHETHER A FIRM REGISTERED REPRESENTATIVE'S OUTSIDE BUSINESS ACTIVITIES WOULD INTERFERE WITH OR COMPROMISE HIS RESPONSIBILITIES TO THE FIRM OR CUSTOMERS AND EVALUATE THE ADVISABILITY OF IMPOSING SPECIFIC CONDITIONS OR LIMITATIONS ON ITS REPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGS STATED THAT A REPRESENTATIVE DISCLOSED HIS POWER-OF-ATTORNEY OVER TWO CLIENTS' ACCOUNTS TO THE FIRM ON THE THREE OCCASIONS. HOWEVER, THE FIRM DID NOT TIMELY REVIEW, EVALUATE OR RESPOND TO THE REPRESENTATIVE'S DISCLOSURES. THE FINDINGS ALSO STATED THAT AFTER ISSUING A COMPLIANCE BULLETIN REMINDING REPRESENTATIVES TO DISCLOSE THEIR ROLES AS TRUSTEES, POWERS OF ATTORNEY OR EXECUTORS, THE FIRM RECEIVED APPROXIMATELY 200 DISCLOSURES, IN ADDITION TO TWO DISCLOSURES FROM THE REPRESENTATIVE. THE FIRM UNREASONABLY DECIDED TO POSTPONE ITS REVIEW OF THESE DISCLOSURES FOR AT LEAST 13 MONTHS WHILE IT RE- EVALUATED ITS CRITERIA AND POLICIES FOR APPROVING REQUESTS TO ACT IN A FIDUCIARY CAPACITY FOR NON-FAMILY MEMBERS. THE FIRM SUBSEQUENTLY ENHANCED THOSE POLICIES. Initiated By: FINRA Date Initiated: 07/09/2018 Docket/Case Number: 2015045233601
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other ©2021Sought: FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 39 www.finra.org/brokercheck User Guidance
Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief N/A Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 07/09/2018 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $200,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $200,000. FINES IN FULL ON JULY 27, 2018. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO CONSIDER WHETHER A FIRM REGISTERED REPRESENTATIVE'S OUTSIDE BUSINESS ACTIVITIES WOULD INTERFERE WITH OR COMPROMISE HIS RESPONSIBILITIES TO THE FIRM OR CUSTOMERS AND EVALUATE THE ADVISABILITY OF IMPOSING SPECIFIC CONDITIONS OR LIMITATIONS ON ITS REPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGS STATED THAT A REPRESENTATIVE DISCLOSED HIS POWER-OF-ATTORNEY OVER TWO CLIENTS' ACCOUNTS TO THE FIRM ON THE THREE OCCASIONS. HOWEVER, THE FIRM DID NOT TIMELY REVIEW, EVALUATE OR RESPOND TO THE REPRESENTATIVE'S DISCLOSURES. THE FINDINGS ALSO STATED THAT AFTER ISSUING A COMPLIANCE BULLETIN REMINDING REPRESENTATIVES TO DISCLOSE THEIR ROLES AS TRUSTEES, POWERS OF ATTORNEY OR EXECUTORS, THE FIRM RECEIVED APPROXIMATELY 200 DISCLOSURES, IN ADDITION TO TWO DISCLOSURES FROM THE REPRESENTATIVE. THE FIRM UNREASONABLY DECIDED TO POSTPONE ITS REVIEW OF THESE DISCLOSURES FOR AT LEAST 13 MONTHS WHILE IT RE- EVALUATED ITS CRITERIA AND POLICIES FOR APPROVING REQUESTS TO ACT IN A FIDUCIARY CAPACITY FOR NON-FAMILY MEMBERS. THE FIRM ©2021 FINRA. All rights reserved. Report aboutSUBSEQUENTLY CETERA FINANCIAL ENHANCED SPECIALISTS THOSE LLC POLICIES. 40 WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM, INCLUDING WSPS, REASONABLY DESIGNED TO CONSIDER WHETHER A FIRM REGISTERED REPRESENTATIVE'S OUTSIDE BUSINESS ACTIVITIES WOULD INTERFERE WITH OR COMPROMISE HIS RESPONSIBILITIES TO THE FIRM OR CUSTOMERS AND EVALUATE THE ADVISABILITY OF IMPOSING SPECIFIC CONDITIONS OR LIMITATIONS ON ITS REPRESENTATIVES' OUTSIDE BUSINESS ACTIVITIES. THE FINDINGS STATED THAT A REPRESENTATIVE DISCLOSED HIS POWER-OF-ATTORNEY OVER TWO CLIENTS' ACCOUNTS TO THE FIRM ON THE THREE OCCASIONS. HOWEVER, THE FIRM DID NOT TIMELY REVIEW, EVALUATE OR RESPOND TO THE REPRESENTATIVE'S DISCLOSURES. THE FINDINGS ALSO STATED THAT AFTER ISSUING A COMPLIANCE BULLETIN REMINDING REPRESENTATIVES TO DISCLOSE THEIR ROLES AS TRUSTEES, POWERS OF ATTORNEY OR EXECUTORS, THE FIRM RECEIVED APPROXIMATELY 200 www.finra.org/brokercheck DISCLOSURES, IN ADDITION TO TWO DISCLOSURES FROM THE User Guidance REPRESENTATIVE. THE FIRM UNREASONABLY DECIDED TO POSTPONE ITS REVIEW OF THESE DISCLOSURES FOR AT LEAST 13 MONTHS WHILE IT RE- EVALUATED ITS CRITERIA AND POLICIES FOR APPROVING REQUESTS TO ACT IN A FIDUCIARY CAPACITY FOR NON-FAMILY MEMBERS. THE FIRM SUBSEQUENTLY ENHANCED THOSE POLICIES. Initiated By: FINRA Date Initiated: 07/09/2018 Docket/Case Number: 2015045233601
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 07/09/2018 Sanctions Ordered: Censure Monetary/Fine $200,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $200,000. i Disclosure 4 of 11 Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. MANY MUTUAL FUNDS WAIVE THE UP-FRONT SALES CHARGES ASSOCIATED WITH CLASS A SHARES FOR CERTAIN RETIREMENT PLANS AND/OR CHARITABLE ORGANIZATIONS. SOME OF THE MUTUAL FUNDS AVAILABLE ON THE FIRM'S RETAIL PLATFORM OFFERED SUCH WAIVERS AND DISCLOSED THOSE WAIVERS IN THEIR PROSPECTUSES. NOTWITHSTANDING THE AVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERS TO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS AND ©2021 FINRA. All rights reserved. Report aboutINSTEAD CETERA SOLD FINANCIAL THEM SPECIALISTS CLASS A LLCSHARES WITH A FRONT-END SALES 41 CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND PROCEDURES REASONABLY DESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OF APPLICABLE SALES CHARGE WAIVERS. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES CHARGE WAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $501,922 FOR MUTUAL FUND PURCHASES MADE SINCE JULY 1, 2009. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. MANY MUTUAL FUNDS WAIVE THE UP-FRONT SALES CHARGES ASSOCIATED WITH CLASS A SHARES FOR CERTAIN RETIREMENT PLANS AND/OR CHARITABLE www.finra.org/brokercheck ORGANIZATIONS. SOME OF THE MUTUAL FUNDS AVAILABLE ON THE User Guidance FIRM'S RETAIL PLATFORM OFFERED SUCH WAIVERS AND DISCLOSED THOSE WAIVERS IN THEIR PROSPECTUSES. NOTWITHSTANDING THE AVAILABILITY OF THE WAIVERS, THE FIRM FAILED TO APPLY THE WAIVERS TO MUTUAL FUND PURCHASES MADE BY ELIGIBLE CUSTOMERS AND INSTEAD SOLD THEM CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND PROCEDURES REASONABLY DESIGNED TO ENSURE THAT ELIGIBLE CUSTOMERS WHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OF APPLICABLE SALES CHARGE WAIVERS. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES CHARGE WAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $501,922 FOR MUTUAL FUND PURCHASES MADE SINCE JULY 1, 2009. Initiated By: FINRA Date Initiated: 08/21/2017 Docket/Case Number: 2016050259101
Principal Product Type: Mutual Fund(s) Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 08/21/2017 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or ©2021deceptive FINRA. conduct? All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 42 www.finra.org/brokercheck User Guidance
Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Disgorgement/Restitution Other Sanctions Ordered: PROVIDE REMEDIATION TO ELIGIBLE CUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERS; ENSURE THAT RETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURE TRANSACTIONS Sanction Details: THE FIRM WAS CENSURED, WILL PROVIDE REMEDIATION TO ELIGIBLE CUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERS, AGREES TO PAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TO TOTAL $572,260, AND WILL ENSURE THAT RETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURE TRANSACTIONS. Regulator Statement IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD; (2) PROMPTLY ESTABLISHED A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (3) PROMPTLY SELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION AND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITS PROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES ©2021 FINRA. All rights reserved. Report aboutCHARGE CETERA OR FINANCIAL CLASS SPECIALISTSB OR C SHARES LLC WITH BACK-END SALES CHARGES 43 AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES- CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $501,922 FOR MUTUAL FUND PURCHASES MADE SINCE JULY 1, 2009. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT www.finra.org/brokercheck DISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLE User Guidance ORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASS A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALES CHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERS WERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHER ONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING THE CUSTOMERS TO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLY SUPERVISE THE APPLICATION OF SALES-CHARGE WAIVERS TO ELIGIBLE MUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TO DETERMINE THE APPLICABILITY OF SALES-CHARGE WAIVERS BUT FAILED TO MAINTAIN ADEQUATE WRITTEN POLICIES OR PROCEDURES TO ASSIST FINANCIAL ADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRM FAILED TO ADEQUATELY NOTIFY AND TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITY OF MUTUAL FUND SALES- CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS. THE FIRM ALSO FAILED TO ADOPT ADEQUATE CONTROLS TO DETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGE WAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUAL FUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLY AVAILABLE SALES-CHARGE WAIVERS, THE FIRM ESTIMATES THAT ELIGIBLE CUSTOMERS WERE OVERCHARGED BY APPROXIMATELY $501,922 FOR MUTUAL FUND PURCHASES MADE SINCE JULY 1, 2009. Initiated By: FINRA Date Initiated: 08/21/2017 Docket/Case Number: 2016050259101
Principal Product Type: Mutual Fund(s) Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 08/21/2017 Sanctions Ordered: Censure Disgorgement/Restitution Other Sanctions Ordered: UNDERTAKING Sanction Details: THE FIRM WAS CENSURED, AGREED TO PAY A TOTAL OF APPROXIMATELY $572,260, INCLUSIVE OF INTEREST, IN RESTITUTION TO ELIGIBLE CUSTOMERS, AND WILL ALSO ENSURE THAT RETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURE ©2021 FINRA. All rights reserved. Report aboutTRANSACTIONS, CETERA FINANCIAL AND SPECIALISTS REQUIRED LLC TO PROVIDE REMEDIATION TO ELIGIBLE 44 CUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERS WHEN THE FIRM FAILED TO IDENTIFY AND APPLY AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE RETIREMENT ACCOUNTS AND CHARITABLE ORGANIZATIONS. THE FIRM WILL PROVIDE TO FINRA A DETAILED PLAN TO REMEDIATE ELIGIBLE CUSTOMERS BASED ON SPECIFIC CRITERIA THAT ARE NOT UNACCEPTABLE TO FINRA. THE FIRM WILL ALSO ADDRESS RESTITUTION FOR EACH RETIREMENT PLAN CUSTOMER THAT, WHILE NOT ELIGIBLE TO PURCHASE CLASS A SHARES WITHOUT A FRONT-END SALES CHARGE, WAS ELIGIBLE TO PURCHASE AN ALTERNATIVE SHARE CLASS (INCLUDING, BUT NOT LIMITED TO, R SHARES) WITHOUT A FRONT-END SALES CHARGE AND WITH ONGOING FEES SUBSTANTIALLY SIMILAR TO THOSE OF THE CLASS A SHARE. THE FIRM WILL SUBMIT TO FINRA A SCHEDULE OF ELIGIBLE CUSTOMERS IDENTIFIED FOR REMEDIATION AND INCLUDE THE DETAILS OF THE QUALIFYING PURCHASES AND TOTAL DOLLAR AMOUNTS OF RESTITUTION THAT WILL BE PROVIDED TO EACH CUSTOMER. www.finra.org/brokercheck User Guidance THE FIRM WAS CENSURED, AGREED TO PAY A TOTAL OF APPROXIMATELY $572,260, INCLUSIVE OF INTEREST, IN RESTITUTION TO ELIGIBLE CUSTOMERS, AND WILL ALSO ENSURE THAT RETIREMENT AND CHARITABLE WAIVERS ARE APPROPRIATELY APPLIED TO ALL FUTURE TRANSACTIONS, AND REQUIRED TO PROVIDE REMEDIATION TO ELIGIBLE CUSTOMERS WHO, FROM JULY 1, 2009, QUALIFIED FOR, BUT DID NOT RECEIVE, THE APPLICABLE MUTUAL FUND SALES CHARGE WAIVERS WHEN THE FIRM FAILED TO IDENTIFY AND APPLY AVAILABLE SALES CHARGE WAIVERS TO ELIGIBLE RETIREMENT ACCOUNTS AND CHARITABLE ORGANIZATIONS. THE FIRM WILL PROVIDE TO FINRA A DETAILED PLAN TO REMEDIATE ELIGIBLE CUSTOMERS BASED ON SPECIFIC CRITERIA THAT ARE NOT UNACCEPTABLE TO FINRA. THE FIRM WILL ALSO ADDRESS RESTITUTION FOR EACH RETIREMENT PLAN CUSTOMER THAT, WHILE NOT ELIGIBLE TO PURCHASE CLASS A SHARES WITHOUT A FRONT-END SALES CHARGE, WAS ELIGIBLE TO PURCHASE AN ALTERNATIVE SHARE CLASS (INCLUDING, BUT NOT LIMITED TO, R SHARES) WITHOUT A FRONT-END SALES CHARGE AND WITH ONGOING FEES SUBSTANTIALLY SIMILAR TO THOSE OF THE CLASS A SHARE. THE FIRM WILL SUBMIT TO FINRA A SCHEDULE OF ELIGIBLE CUSTOMERS IDENTIFIED FOR REMEDIATION AND INCLUDE THE DETAILS OF THE QUALIFYING PURCHASES AND TOTAL DOLLAR AMOUNTS OF RESTITUTION THAT WILL BE PROVIDED TO EACH CUSTOMER. Firm Statement IN RESOLVING THIS MATTER, FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THE FIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLE CUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANT PERIOD; (2) PROMPTLY ESTABLISHED A PLAN OF REMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVE APPROPRIATE SALES CHARGE WAIVERS; (3) PROMPTLY SELF-REPORTED TO FINRA; (4) PROMPTLY TAKEN ACTION AND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5) EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TO DETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITS PROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT. i Disclosure 5 of 11 Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURES ©2021 FINRA. All rights reserved. Report aboutDESIGNED CETERA FINANCIALTO REASONABLY SPECIALISTS ENSURE LLC SUITABILITY IN ITS MULTI-SHARE 45 CLASS VA SALES, INCLUDING L-SHARE CONTRACTS.
THE FINDINGS ALSO STATED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THE FIRM'S ANNUAL REVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, IT FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM AND WSPS RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENT TRAINING TO ITS REGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS A RESULT, THE REGISTERED REPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FOR REVIEWING VA TRANSACTIONS, FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TO SHARE CLASS SELECTION. THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS, INCLUDING SALES OF L-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENT HORIZON. BECAUSE OF THE LACK OF TRAINING AND GUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLS TO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDE COMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHER INFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEE IF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONG TERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITS PRINCIPALS ON THE SALE OF LONG-TERM INCOME RIDERS WITH MULTI- SHARE CLASS VAS, PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS.
THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO IMPLEMENT A REASONABLE SUPERVISORY SYSTEMS AND PROCEDURES TO MONITOR CERTAIN VA EXCHANGES. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITS www.finra.org/brokercheck REGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARE User Guidance CLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS.
THE FINDINGS ALSO STATED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THE FIRM'S ANNUAL REVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, IT FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM AND WSPS RELATED TO THE SALE OF MULTI-SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENT TRAINING TO ITS REGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS A RESULT, THE REGISTERED REPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FOR REVIEWING VA TRANSACTIONS, FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TO SHARE CLASS SELECTION. THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS, INCLUDING SALES OF L-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENT HORIZON. BECAUSE OF THE LACK OF TRAINING AND GUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLS TO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDE COMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHER INFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEE IF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONG TERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITS PRINCIPALS ON THE SALE OF LONG-TERM INCOME RIDERS WITH MULTI- SHARE CLASS VAS, PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS.
THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO IMPLEMENT A REASONABLE SUPERVISORY SYSTEMS AND PROCEDURES TO MONITOR CERTAIN VA EXCHANGES. Initiated By: FINRA Date Initiated: 11/02/2016 Docket/Case Number: 2015045234401
Principal Product Type: Other Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES(VA): L-SHARE VA'S (L-SHARE CONTRACTS) - Principal Sanction(s)/Relief ©2021Sought: FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 46 www.finra.org/brokercheck User Guidance
Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 11/02/2016 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $350,000.00 Other Sanctions Ordered: UNDERTAKINGS Sanction Details: THE FIRM WAS CENSURED, FINED $350,000, AND REQUIRED TO CONDUCT UNDERTAKINGS. THE FIRM WAS REQUIRED TO REVIEW AND REVISE, AS NECESSARY, THE FIRM'S SYSTEMS, POLICIES AND PROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREAS DESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYS OF THE DATE THIS AWC IS ACCEPTED, THE FIRM SHALL CERTIFY IN WRITING TO FINRA THAT WITH RESPECT TO THE AREAS DESCRIBED IN SECTION I.A. OF THIS AWC: (I) THE FIRM HAS ENGAGED IN THE REVIEW; AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HAS ESTABLISHED AND IMPLEMENTED SYSTEMS AND POLICIES AND PROCEDURES (WRITTEN OR OTHERWISE) THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA AND NASD RULES CITED IN THE AWC. FINES PAID IN FULL ON NOVEMBER 21, 2016. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITS REGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARE CLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURES DESIGNED TO ©2021 FINRA. All rights reserved. Report aboutREASONABLY CETERA FINANCIAL ENSURE SPECIALISTS SUITABILITY LLC IN ITS MULTI-SHARE CLASS VA SALES, 47 INCLUDING L-SHARE CONTRACTS. THE FINDINGS ALSO STATED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THE FIRM'S ANNUAL REVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, IT FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM AND WSPS RELATED TO THE SALE OF MULTI- SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENT TRAINING TO ITS REGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS A RESULT, THE REGISTERED REPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FOR REVIEWING VA TRANSACTIONS, FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TO SHARE CLASS SELECTION. THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS, INCLUDING SALES OF L-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENT HORIZON. BECAUSE OF THE LACK OF TRAINING AND GUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLS TO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDE COMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHER INFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEE IF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONG TERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITS PRINCIPALS ON THE SALE OF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS, PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO IMPLEMENT A REASONABLE SUPERVISORY SYSTEMS AND PROCEDURES TO MONITOR CERTAIN VA EXCHANGES. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO MAINTAIN A PROCESS REASONABLY DESIGNED TO SUPERVISE ITS www.finra.org/brokercheck REGISTERED REPRESENTATIVES' RECOMMENDATION OF MULTI-SHARE User Guidance CLASS VARIABLE ANNUITIES (VAS) TO ITS CUSTOMERS. THE FINDINGS STATED THAT DESPITE THE SIGNIFICANT ROLE THAT VA SALES PLAYED IN THE RESPONDENT'S OVERALL BUSINESS, THE FIRM FAILED TO IMPLEMENT A SUPERVISORY SYSTEM AND PROCEDURES DESIGNED TO REASONABLY ENSURE SUITABILITY IN ITS MULTI-SHARE CLASS VA SALES, INCLUDING L-SHARE CONTRACTS. THE FINDINGS ALSO STATED THAT DESPITE THE FACT THAT A SIGNIFICANT PORTION OF THE FIRM'S ANNUAL REVENUES FROM VAS WERE GENERATED FROM L-SHARE CONTRACTS, IT FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE A REASONABLE SUPERVISORY SYSTEM AND WSPS RELATED TO THE SALE OF MULTI- SHARE CLASS VAS. THE FIRMS FAILED TO PROVIDE SUFFICIENT TRAINING TO ITS REGISTERED REPRESENTATIVES AND PRINCIPALS ON THE SALE AND SUPERVISION OF MULTI-SHARE CLASS VAS. THE FIRM'S WSPS AND TRAINING MATERIALS FAILED TO PROVIDE REGISTERED REPRESENTATIVES AND PRINCIPALS WITH SUFFICIENT GUIDANCE OR SUITABILITY CONSIDERATIONS FOR SALES OF DIFFERENT VA SHARE CLASSES. AS A RESULT, THE REGISTERED REPRESENTATIVES AND PRINCIPALS WHO WERE RESPONSIBLE FOR REVIEWING VA TRANSACTIONS, FAILED TO ADEQUATELY CONSIDER SUITABILITY ISSUES RELATED TO SHARE CLASS SELECTION. THEY ALSO FAILED TO IDENTIFY RED FLAGS IN VA RECOMMENDATIONS, INCLUDING SALES OF L-SHARE CONTRACTS TO CUSTOMERS WITH A LONG-TERM INVESTMENT HORIZON. BECAUSE OF THE LACK OF TRAINING AND GUIDANCE, REGISTERED REPRESENTATIVES DID NOT HAVE THE TOOLS TO PRESENT POTENTIAL PURCHASERS WITH A SIDE-BY-SIDE COMPARISON OF THE FEES AND SURRENDER CHARGES OR OTHER INFORMATION DETAILING THE POTENTIAL IMPACT OF THE INCREASED FEE IF THE L-SHARE CONTRACT WAS HELD BY THE CUSTOMER FOR A LONG TERM. IN ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE WSPS OR PROVIDE SUFFICIENT GUIDANCE OR TRAINING TO ITS REGISTERED REPRESENTATIVES AND ITS PRINCIPALS ON THE SALE OF LONG-TERM INCOME RIDERS WITH MULTI-SHARE CLASS VAS, PARTICULARLY THE COMBINATION OF L-SHARE CONTRACTS WITH LONG-TERM INCOME RIDERS. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TO IMPLEMENT A REASONABLE SUPERVISORY SYSTEMS AND PROCEDURES TO MONITOR CERTAIN VA EXCHANGES. Initiated By: FINRA Date Initiated: 11/02/2016 Docket/Case Number: 2015045234401
Principal Product Type: Other Other Product Type(s): MULTI-SHARE CLASS VARIABLE ANNUITIES(VA): L-SHARE VA'S (L-SHARE CONTRACTS) - Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief ©2021Sought: FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 48 www.finra.org/brokercheck User Guidance
Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 11/02/2016 Sanctions Ordered: Censure Monetary/Fine $350,000.00 Other Sanctions Ordered: UNDERTAKINGS Sanction Details: THE FIRM WAS CENSURED, FINED $350,000, AND REQUIRED TO CONDUCT UNDERTAKINGS. THE FIRM WAS REQUIRED TO REVIEW AND REVISE, AS NECESSARY, THE FIRM'S SYSTEMS, POLICIES AND PROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING WITH RESPECT TO THE AREAS DESCRIBED WITHIN SECTION I.A OF THIS AWC. WITHIN 90 BUSINESS DAYS OF THE DATE THIS AWC IS ACCEPTED, THE FIRM SHALL CERTIFY IN WRITING TO FINRA THAT WITH RESPECT TO THE AREAS DESCRIBED IN SECTION I.A. OF THIS AWC: (I) THE FIRM HAS ENGAGED IN THE REVIEW; AND (II) AS OF THE DATE OF THE CERTIFICATION, THE FIRM HAS ESTABLISHED AND IMPLEMENTED SYSTEMS AND POLICIES AND PROCEDURES (WRITTEN OR OTHERWISE) THAT ARE REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA AND NASD RULES CITED IN THE AWC. i Disclosure 6 of 11 Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ISSUE FOR CUSTOMER ACCOUNTS STATUTORILY REQUIRED 30-DAY POST- ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS AND 36-MONTH POST-ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS. THE FINDINGS STATED THAT THESE FAILURES WERE CAUSED BY A COMPUTER PROGRAMMING ERROR THAT OCCURRED DURING THE FIRM'S TRANSITION TO A NEW INTERNAL FIRM SYSTEM. DURING THE CONVERSION PROCESS, CUSTOMER PROFILE INFORMATION, INCLUDING THE DATES TRIGGERING THE ISSUANCE OF 17A-3 ACCOUNT NOTICES, WAS SUCCESSFULLY TRANSFERRED FROM THE FIRM'S OLD SYSTEM TO ITS NEW ONE. HOWEVER, A FLAW IN THE ALGORITHM USED TO TRIGGER THE MAILING OF ACCOUNT RECORDS RESULTED IN THE FIRM'S FAILURE TO ISSUE THE REQUIRED ACCOUNT NOTICES FOR THE CUSTOMER ACCOUNTS. Initiated By: FINRA ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 49 www.finra.org/brokercheck User Guidance
Initiated By: FINRA Date Initiated: 05/04/2016 Docket/Case Number: 2013037346101
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief N/A Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 05/04/2016 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $40,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $40,000. FINE PAID IN FULL ON MAY 12, 2016. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ISSUE FOR CUSTOMER ACCOUNTS STATUTORILY REQUIRED 30-DAY POST- ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS AND 36-MONTH POST-ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS. THE FINDINGS STATED THAT THESE FAILURES WERE CAUSED BY A COMPUTER PROGRAMMING ERROR THAT OCCURRED DURING THE FIRM'S TRANSITION TO A NEW INTERNAL FIRM SYSTEM. DURING THE CONVERSION PROCESS, CUSTOMER PROFILE INFORMATION, INCLUDING THE DATES TRIGGERING THE ISSUANCE OF 17A-3 ACCOUNT NOTICES, WAS SUCCESSFULLY TRANSFERRED FROM THE FIRM'S OLD SYSTEM TO ITS NEW ONE. HOWEVER, A FLAW IN THE ALGORITHM USED TO TRIGGER ©2021 FINRA. All rights reserved. Report aboutTHE CETERA MAILING FINANCIAL OF ACCOUNT SPECIALISTS RECORDS LLC RESULTED IN THE FIRM'S FAILURE 50 TO ISSUE THE REQUIRED ACCOUNT NOTICES FOR THE CUSTOMER ACCOUNTS. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ISSUE FOR CUSTOMER ACCOUNTS STATUTORILY REQUIRED 30-DAY POST- ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS AND 36-MONTH POST-ACCOUNT OPENING INVESTOR PROFILE DOCUMENTS. THE FINDINGS STATED THAT THESE FAILURES WERE CAUSED BY A COMPUTER PROGRAMMING ERROR THAT OCCURRED DURING THE FIRM'S www.finra.org/brokercheck TRANSITION TO A NEW INTERNAL FIRM SYSTEM. DURING THE User Guidance CONVERSION PROCESS, CUSTOMER PROFILE INFORMATION, INCLUDING THE DATES TRIGGERING THE ISSUANCE OF 17A-3 ACCOUNT NOTICES, WAS SUCCESSFULLY TRANSFERRED FROM THE FIRM'S OLD SYSTEM TO ITS NEW ONE. HOWEVER, A FLAW IN THE ALGORITHM USED TO TRIGGER THE MAILING OF ACCOUNT RECORDS RESULTED IN THE FIRM'S FAILURE TO ISSUE THE REQUIRED ACCOUNT NOTICES FOR THE CUSTOMER ACCOUNTS. Initiated By: FINRA Date Initiated: 05/04/2016 Docket/Case Number: 2013037346101
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief N/A Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 05/04/2016 Sanctions Ordered: Censure Monetary/Fine $40,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $40,000 i Disclosure 7 of 11 Reporting Source: Regulator Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND ENFORCE WRITTEN SUPERVISORY PROCEDURES DESIGNED TO IDENTIFY AND PREVENT UNSUITABLE EXCESSIVE TRADING AND CHURNING IN CUSTOMER ACCOUNTS. THE FINDINGS STATED THAT ALTHOUGH THE FIRM'S WRITTEN SUPERVISORY PROCEDURES IN EFFECT EXPLICITLY PROVIDED FOR THE MONTHLY REVIEW OF AN ACTIVE ACCOUNT REPORT, NO SUCH REPORT EXISTED AND THE FIRM HAD NO OTHER SYSTEMS IN PLACE THAT WOULD MONITOR ACTIVE ACCOUNTS FOR EXCESSIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRM'S FAILURE TO HAVE SUCH SYSTEMS IN PLACE AND FAILURE TO ENFORCE WRITTEN SUPERVISORY PROCEDURES ALLOWED A REGISTERED REPRESENTATIVE TO, AMONG OTHER THINGS, CHURN A CUSTOMER'S ACCOUNT IN ©2021 FINRA. All rights reserved. Report aboutVIOLATION CETERA FINANCIALOF SECTION SPECIALISTS 10(B) OF LLC THE SECURITIES EXCHANGE ACT OF 51 1934 AND RULE 10B-5. THE FIRM PREVIOUSLY COMPENSATED THE CUSTOMER FOR, AMONG OTHER THINGS, THE LOSSES IN THE ACCOUNT. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND ENFORCE WRITTEN SUPERVISORY PROCEDURES DESIGNED TO IDENTIFY AND PREVENT UNSUITABLE EXCESSIVE TRADING AND CHURNING IN CUSTOMER ACCOUNTS. THE FINDINGS STATED THAT ALTHOUGH THE FIRM'S WRITTEN SUPERVISORY PROCEDURES IN EFFECT EXPLICITLY PROVIDED FOR THE MONTHLY REVIEW OF AN ACTIVE ACCOUNT REPORT, NO SUCH REPORT EXISTED AND THE FIRM HAD NO OTHER SYSTEMS IN www.finra.org/brokercheck PLACE THAT WOULD MONITOR ACTIVE ACCOUNTS FOR EXCESSIVE User Guidance TRADING. THE FINDINGS ALSO STATED THAT THE FIRM'S FAILURE TO HAVE SUCH SYSTEMS IN PLACE AND FAILURE TO ENFORCE WRITTEN SUPERVISORY PROCEDURES ALLOWED A REGISTERED REPRESENTATIVE TO, AMONG OTHER THINGS, CHURN A CUSTOMER'S ACCOUNT IN VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5. THE FIRM PREVIOUSLY COMPENSATED THE CUSTOMER FOR, AMONG OTHER THINGS, THE LOSSES IN THE ACCOUNT. Initiated By: FINRA Date Initiated: 10/24/2014 Docket/Case Number: 2012033141502
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief N/A Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 10/24/2014 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Censure Monetary/Fine $75,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $75,000. FINE PAID IN FULL ON NOVEMBER 6, 2014. i Reporting Source: Firm Current Status: Final Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND ENFORCE WRITTEN SUPERVISORY PROCEDURES DESIGNED TO IDENTIFY AND PREVENT UNSUITABLE EXCESSIVE TRADING AND CHURNING IN CUSTOMER ACCOUNTS. THE FINDINGS STATED THAT ALTHOUGH THE FIRM'S WRITTEN SUPERVISORY PROCEDURES IN EFFECT EXPLICITLY PROVIDED FOR THE MONTHLY REVIEW OF AN ACTIVE ACCOUNT REPORT, ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 52 NO SUCH REPORT EXISTED AND THE FIRM HAD NO OTHER SYSTEMS IN PLACE THAT WOULD MONITOR ACTIVE ACCOUNTS FOR EXCESSIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRM'S FAILURE TO HAVE SUCH SYSTEMS IN PLACE AND FAILURE TO ENFORCE WRITTEN SUPERVISORY PROCEDURES ALLOWED A REGISTERED REPRESENTATIVE TO, AMONG OTHER THINGS, CHURN A CUSTOMER'S ACCOUNT IN VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5. THE FIRM PREVIOUSLY COMPENSATED THE CUSTOMER FOR, AMONG OTHER THINGS, THE LOSSES IN THE ACCOUNT. WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND ENFORCE www.finra.org/brokercheck WRITTEN SUPERVISORY PROCEDURES DESIGNED TO IDENTIFY AND User Guidance PREVENT UNSUITABLE EXCESSIVE TRADING AND CHURNING IN CUSTOMER ACCOUNTS. THE FINDINGS STATED THAT ALTHOUGH THE FIRM'S WRITTEN SUPERVISORY PROCEDURES IN EFFECT EXPLICITLY PROVIDED FOR THE MONTHLY REVIEW OF AN ACTIVE ACCOUNT REPORT, NO SUCH REPORT EXISTED AND THE FIRM HAD NO OTHER SYSTEMS IN PLACE THAT WOULD MONITOR ACTIVE ACCOUNTS FOR EXCESSIVE TRADING. THE FINDINGS ALSO STATED THAT THE FIRM'S FAILURE TO HAVE SUCH SYSTEMS IN PLACE AND FAILURE TO ENFORCE WRITTEN SUPERVISORY PROCEDURES ALLOWED A REGISTERED REPRESENTATIVE TO, AMONG OTHER THINGS, CHURN A CUSTOMER'S ACCOUNT IN VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5. THE FIRM PREVIOUSLY COMPENSATED THE CUSTOMER FOR, AMONG OTHER THINGS, THE LOSSES IN THE ACCOUNT. Initiated By: FINRA Date Initiated: 10/24/2014 Docket/Case Number: 2012033141502
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Other Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 10/24/2014 Sanctions Ordered: Censure Monetary/Fine $75,000.00 Other Sanctions Ordered: Sanction Details: THE FIRM WAS CENSURED AND FINED $75,000. FINE PAID IN FULL ON 11/05/2014. i Disclosure 8 of 11 Reporting Source: Regulator Current Status: Final Allegations: RESPONDENT FAILED TO ENFORCE ITS OWN WRITTEN PROCEDURES TO ENSURE THAT THE DEFICIENCY (IT WAS FOUND IN INTERNAL BRANCH AUDIT THAT REGISTERED REPRESENTATIVE FAILED TO MAINTAIN BLOTTER PROPERLY) WAS CORRECTED AFTER AND AS SUCH, HAS VIOLATED FINRA CONDUCT RULE 3010(B)(1) AS ADOPTED BY REFERENCE UNDER NAC 90.321.
©2021Initiated FINRA. By: All rights reserved. Report aboutNEVADA CETERA FINANCIAL SPECIALISTS LLC 53 www.finra.org/brokercheck User Guidance
Initiated By: NEVADA Date Initiated: 12/24/2009 Docket/Case Number: CI09-105 URL for Regulatory Action: Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Civil and Administrative Penalt(ies) /Fine(s) Sought: Other Sanction(s)/Relief Sought:
Resolution: Consent Resolution Date: 12/24/2009 Does the order constitute a No final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct? Sanctions Ordered: Monetary/Fine $2,500.00 Other Sanctions Ordered: INPECTION FEE OF $1,000.00; RESPONDENT AGREES THAT EACH OF ITS REGISTERED REPRESENTATIVES LOCATED IN NEVADA BRANCH OFFICES WILL BE REQUIRED BY MARCH 2010 TO TAKE OR RETAKE AND COMPLETE THE GENWORTH TRAINING COURSE TITLED SALES, COMPLIANCE, OPERATIONS, & PROCEDURES. RESPONDENT ALSO AGREES TO PROVIDE THE DIVISION WITH THE PROCEDURES THAT IT WILL INSTITUTE TO ENSURE THAT ANY DEFICIENCIES NOTED DURING ANY FUTURE GENWORTH INTERNAL AUDIT OF A NEVADA BRANCH OFFICE ARE CORRECTED AND COMPLIED WITH BY ITS REGISTERED REPRESENTATIVES. Sanction Details: PAID CIVIL PENALTY AND INSPECTION FEES ON 12/24/2009 Regulator Statement WITHOUT NEITHER ADMITTING NOR DENYING THE ALLEGATIONS OF THE DIVISION, RESPONDENT ENTERED INTO THE ADMINISTRATIVE CONSENT ORDER i Reporting Source: Firm Current Status: Final
©2021Allegations: FINRA. All rights reserved. Report aboutRESPONDENT CETERA FINANCIAL FAILED SPECIALISTS TO ENFORCE LLC ITS OWN WRITTEN PROCEDURES TO 54 ENSURE THAT THE DEFICIENCY (IT WAS FOUND IN AN INTERNAL BRANCH AUDIT THAT REGISTERED REPRESENTATIVE FAILED TO MAINTAIN BLOTTER PROPERLY) WAS CORRECTED AFTER AND AS SUCH, HAS VIOLATED FINRA CONDUCT RULE 3010(B)(1) AS ADOPTED BY REFERENCE UNDER NAC 90.321. www.finra.org/brokercheck User Guidance
Allegations: RESPONDENT FAILED TO ENFORCE ITS OWN WRITTEN PROCEDURES TO ENSURE THAT THE DEFICIENCY (IT WAS FOUND IN AN INTERNAL BRANCH AUDIT THAT REGISTERED REPRESENTATIVE FAILED TO MAINTAIN BLOTTER PROPERLY) WAS CORRECTED AFTER AND AS SUCH, HAS VIOLATED FINRA CONDUCT RULE 3010(B)(1) AS ADOPTED BY REFERENCE UNDER NAC 90.321. Initiated By: NEVADA Date Initiated: 12/24/2009 Docket/Case Number: CI09-105
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Civil and Administrative Penalt(ies) /Fine(s) Sought: Other Sanction(s)/Relief Sought:
Resolution: Consent Resolution Date: 12/24/2009 Sanctions Ordered: Monetary/Fine $2,500.00 Other Sanctions Ordered: INPECTION FEE OF $1,000.00; RESPONDENT AGREES THAT EACH OF ITS REGISTERED REPRESENTATIVES LOCATED IN NEVADA BRANCH OFFICES WILL BE REQUIRED BY MARCH 2010 TO TAKE OR RETAKE AND COMPLETE THE GENWORTH TRAINING COURSE TITLED SALES, COMPLIANCE, OPERATIONS, & PROCEDURES. RESPONDENT ALSO AGREES TO PROVIDE THE DIVISION WITH THE PROCEDURES THAT IT WILL INSTITUTE TO ENSURE THAT ANY DEFICIENCIES NOTED DURING ANY FUTURE GENWORTH INTERNAL AUDIT OF A NEVADA BRANCH OFFICE ARE CORRECTED AND COMPLIED WITH BY ITS REGISTERED REPRESENTATIVES. Sanction Details: PAID CIVIL PENALTY AND INSPECTION FEES ON 12/24/2009 Firm Statement WITHOUT EITHER ADMITTING NOR DENYING THE ALLEGATIONS OF THE DIVISION, RESPONDENT ENTERED INTO THE ADMINISTRATIVE CONSENT ORDER i Disclosure 9 of 11 Reporting Source: Regulator Current Status: Final
©2021Allegations: FINRA. All rights reserved. Report aboutUNREGISTERED CETERA FINANCIAL ACTIVITY SPECIALISTS LLC 55 www.finra.org/brokercheck User Guidance
Allegations: UNREGISTERED ACTIVITY Initiated By: FLORIDA DIVISION OF SECURITIES Date Initiated: 08/23/2000 Docket/Case Number: 2998-S-8/00 URL for Regulatory Action: Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Cease and Desist Sought: Other Sanction(s)/Relief Sought:
Resolution: Stipulation and Consent Resolution Date: 08/30/2000 Sanctions Ordered: Monetary/Fine $11,768.95 Cease and Desist/Injunction Other Sanctions Ordered: AMEND SUPERVISORY PROCEDURES MANUAL TO INCLUDE LANGUAGE THAT ADDRESSES THE REQUIREMENT THAT OFFICE LOCATIONS MEETING THE DEFINITION OF BRANCH MUST BE REGISTERED IN THE STATE PRIOR TO CONDUCTING BUSINESS. Sanction Details: N/A Regulator Statement N/A i Reporting Source: Firm Current Status: Final Appealed To and Date Appeal N/A Filed: Allegations: ALLEGED THAT GENWORTH FINANCIAL SECURITIES CORP. CONDUCTED SECURITIES BUSINESS IN FL WITHOUT BENEFIT OF REGISTRATION IN VIOLATION OF FL STATUTE 512.12(5) AND RULE 3E-600.004(3)(A) OF FL ADMINISTRATIVE CODE. ALLEGED FAILURE TO FOLLOW SUPERVISORY PROCEDURES RELATED TO BRANCH OFFICE REGISTRATION. Initiated By: STATE OF FL SECURITIES DIVISION Date Initiated: 08/23/2000 Docket/Case Number: 2998-S-8/00 ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 56 www.finra.org/brokercheck User Guidance
Docket/Case Number: 2998-S-8/00
Principal Product Type: Other Other Product Type(s): SECURITIES PRODUCTS Principal Sanction(s)/Relief Cease and Desist Sought: Other Sanction(s)/Relief STATE OF FL ADMINISTRATIVE PROCEEDING. ORDERED TO CEASE & Sought: DESIST ALL PRESENT AND FUTURE VIOLATIONS OF C517 OF FL STATUTES. OTHER: MONETARY FINE OF $5000.00 AND DISGORGEMENT OF PROFITS IN THE AMOUNT OF $6788.95. ORDERED TO AMEND SUPERVISORY PROCEDURES TO CLARIFY BRANCH OFFICE REGISTRATION REQUIREMENTS.
Resolution: Stipulation and Consent Resolution Date: 08/23/2000 Sanctions Ordered: Monetary/Fine $5,000.00 Disgorgement/Restitution Cease and Desist/Injunction Other Sanctions Ordered: ORDERED TO CEASE & DESIST ALL PRESENT AND FUTURE VIOLATIONS OF C517 OF FL STATUTES. ORDERED TO AMEND SUPERVISORY PROCEDURES TO CLARIFY BRANCH OFFICE REGISTRATION REQUIREMENTS. Sanction Details: MONETARY FINE - $5000.00 DISGORGEMENT - $6788.95 DATE PAID - CHECK DATE 8/18/00, DELIVERED 8/23/00, RECEIVED ON 8/24/00 Firm Statement GENWORTH FINANCIAL SECURITIES PAID THE REQUIRED FINE AND DISGORGEMENT AND AMENDED ITS WRITTEN SUPERVISORY PROCEDURES TO CLARIFY BRANCH OFFICE REGISTRATION REQUIREMENTS. i Disclosure 10 of 11 Reporting Source: Regulator Current Status: Final Allegations: NASD RULES 1120(A) AND 2110 - A RESPONDENT PERFORMED DUTIES AS A REGISTERED REPRESENTATIVE OF THE FIRM DESPITE THE FACT THAT HIS REGISTRATION WITH THE NASD WAS INACTIVE DUE TO HIS FAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE NASD'S CONTINUING EDUCATION PROGRAM; RESPONDENT MEMBER, ACTING THROUGH ANOTHER INDIVIDUAL, PERMITTED THE INDIVIDUAL TO CONTINUE TO ©2021 FINRA. All rights reserved. Report aboutPERFORM CETERA DUTIESFINANCIAL AS SPECIALISTS A REGISTERED LLC REPRESENTATIVE OF THE FIRM, 57 INCLUDING EFFECTING SECURITIES TRANSACTIONS ON BEHALF OF PUBLIC CUSTOMERS, DESPITE THE FACT THAT REGISTRATION WITH THE NASD WAS INACTIVE DUE TO HIS FAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE NASD'S CONTINUING EDUCATION PROGRAM. NASD RULES 1120(A) AND 2110 - A RESPONDENT PERFORMED DUTIES AS A www.finra.org/brokercheck REGISTERED REPRESENTATIVE OF THE FIRM DESPITE THE FACT THAT HIS User Guidance REGISTRATION WITH THE NASD WAS INACTIVE DUE TO HIS FAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE NASD'S CONTINUING EDUCATION PROGRAM; RESPONDENT MEMBER, ACTING THROUGH ANOTHER INDIVIDUAL, PERMITTED THE INDIVIDUAL TO CONTINUE TO PERFORM DUTIES AS A REGISTERED REPRESENTATIVE OF THE FIRM, INCLUDING EFFECTING SECURITIES TRANSACTIONS ON BEHALF OF PUBLIC CUSTOMERS, DESPITE THE FACT THAT REGISTRATION WITH THE NASD WAS INACTIVE DUE TO HIS FAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE NASD'S CONTINUING EDUCATION PROGRAM. Initiated By: THE NATIONAL ASSOCIATION OF SECURITIES DEALERS Date Initiated: 02/14/2000 Docket/Case Number: C8A000013
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 02/14/2000 Sanctions Ordered: Monetary/Fine $2,700.00 Other Sanctions Ordered: Sanction Details: CENSURED AND FINED $2,700 JOINTLY AND SEVERALLY. i Reporting Source: Firm Current Status: Final Allegations: GENWORTH FINANCIAL SECURITIES CORPORATION, ACTING THROUGH ONE OF IT'S SUPERVISORS, PERMITTED ALBERT W. SCHMITT, REGISTERED REPRESENTATIVE, TO PERFORM DUTIES AS A REGISTERED REPRESENTATIVE DURING THE PERIOD DECEMBER 19, 1997 THROUGH JANUARY 6, 1998 DESPITE THE FACT THAT SCHMITT'S REGISTRATION WITH THE NASD WAS INACTIVE DUE TO HIS FAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE NASD CONTINUING EDUCATION PROGRAM. Initiated By: NASD REGULATION Date Initiated: 01/29/1999 Docket/Case Number: C8A000013-AWC ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 58 www.finra.org/brokercheck User Guidance
Docket/Case Number: C8A000013-AWC
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Civil and Administrative Penalt(ies) /Fine(s) Sought: Other Sanction(s)/Relief Sought:
Resolution: Acceptance, Waiver & Consent(AWC) Resolution Date: 02/14/2000 Sanctions Ordered: Monetary/Fine $2,700.00 Other Sanctions Ordered: Sanction Details: GENWORTH FINANCIAL SECURITIES CORPORATION WAS FINED $2700.00. GENWORTH FINANCIAL SECURITIES CORPORATION SIGNED THE AWC WITHOUT ADMITTING OR DENYING THE ALLEGED VIOLATION. i Disclosure 11 of 11 Reporting Source: Regulator Current Status: Final Allegations: Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. Date Initiated: 04/03/1998 Docket/Case Number: C8A980023
Principal Product Type: Other Product Type(s): Principal Sanction(s)/Relief Sought: Other Sanction(s)/Relief Sought:
Resolution: Decision & Order of Offer of Settlement Resolution Date: 09/16/1998 Sanctions Ordered: Censure Monetary/Fine $5,000.00 ©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 59 www.finra.org/brokercheck User Guidance
Other Sanctions Ordered: Sanction Details: Regulator Statement COMPLAINT NO. C8A980023 FILED APRIL 3, 1998 BY DISTRICT NO. 8 AGAINST RESPONDENTS TERRA SECURITIES CORPORATION, PETER R. TRAPANI AND KENNETH J. KOLNICKI ALLEGING VIOLATIONS OF NASD RULES 2110, 3010, 3040 AND 3050 IN THAT RESPONDENT TRAPANI PARTICIPATED IN PRIVATE SECURITIES TRANSACTIONS AND FAILED TO GIVE WRITTEN NOTICE OF HIS INTENTION TO ENGAGE IN SUCH ACTIVITIES TO RESPONDENT MEMBER, AND RECEIVE WRITTEN ACKNOWLEDGEMENT OR APPROVAL FROM RESPONDENT MEMBER PRIOR TO ENGAGING IN SUCH ACTIVITIES; RESPONDENT TRAPANI OPENED SEVERAL SECURITIES BROKERAGE ACCOUNTS AT TWO MEMBER FIRMS AND FAILED TO GIVE WRITTEN NOTICE TO RESPONDENT MEMBER OF THE AFOREMENTIONED ACCOUNTS, AND FAILED TO GIVE WRITTEN NOTICE TO THE TWO MEMBER FIRMS THAT HE WAS ASSOCIATED WITH RESPONDENT MEMBER; RESPONDENT TRAPANI PURCHASED SHARES OF COMMON STOCK AT A PUBLIC OFFERING PRICE OF $10 PER SHARE, THE PRICE OF WHICH ROSE TO AN IMMEDIATE AFTERMARKET PRICE OF $10.25 PER SHARE ON THE FIRST DAY OF TRADING IN THE SECONDARY MARKET, IN CONTRAVENTION OF IM-2110-1; AND, RESPONDENT MEMBER, ACTING THROUGH RESPONDENT KOLNICKI, FAILED TO ESTABLISH, MAINTAIN AND/OR ENFORCE WRITTEN SUPERVISORY PROCEDURES, OR TO OTHERWISE ADEQUATELY SUPERVISE RESPONDENT TRAPANI TO PREVENT THE OCCURRENCE OF SUCH VIOLATIONS.
ON SEPTEMBER 16, 1998, THE DECISION AND ORDER OF ACCEPTANCE OF OFFER OF SETTLEMENT SUBMITTED BY RESPONDENTS MEMBER AND KOLNICKI WAS ISSUED; THEREFORE, THEY ARE CENSURED AND FINED $5,000, JOINTLY AND SEVERALLY. i Reporting Source: Firm Current Status: Final Allegations: GENWORTH FINANCIAL SECURITIES CORPORATION, ACTING THROUGH ONE OF ITS SUPERVISORS, FAILED TO PROPERLY SUPERVISE THE ACTIVITIES OF REGISTERED REPRESENTATIVE PETER TRAPANI, IN THAT ©2021 FINRA. All rights reserved. Report aboutTHE CETERA SUPERVISOR FINANCIAL SHOULD SPECIALISTS HAVE LLC KNOWN THAT TRAPANI OPENED AND/OR 60 MAINTAINED BROKERAGE ACCOUNTS AT OTHER BROKER DEALERS IN VIOLATION OF NASD CONDUCT RULES 2110 & 3110 www.finra.org/brokercheck User Guidance
GENWORTH FINANCIAL SECURITIES CORPORATION, ACTING THROUGH ONE OF ITS SUPERVISORS, FAILED TO PROPERLY SUPERVISE THE ACTIVITIES OF REGISTERED REPRESENTATIVE PETER TRAPANI, IN THAT THE SUPERVISOR SHOULD HAVE KNOWN THAT TRAPANI OPENED AND/OR MAINTAINED BROKERAGE ACCOUNTS AT OTHER BROKER DEALERS IN VIOLATION OF NASD CONDUCT RULES 2110 & 3110 Initiated By: NASD REGULATION Date Initiated: 12/17/1997 Docket/Case Number: C8A980023
Principal Product Type: No Product Other Product Type(s): Principal Sanction(s)/Relief Civil and Administrative Penalt(ies) /Fine(s) Sought: Other Sanction(s)/Relief Sought:
Resolution: Decision & Order of Offer of Settlement Resolution Date: 09/16/1998 Sanctions Ordered: Censure Monetary/Fine $5,000.00 Other Sanctions Ordered: Sanction Details: GENWORTH FINANCIAL SECURITIES CORPORATION WAS CENSURED AND FINED $5,000.00. THE $5000.00 FINE WAS PAID BY GENWORTH FINANCIAL SECURITIES CORP.
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 61 www.finra.org/brokercheck User Guidance
Arbitration Award - Award / Judgment Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheck provides summary information regarding FINRA arbitration awards involving securities and commodities disputes between public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.
Disclosure 1 of 3 Reporting Source: Regulator Type of Event: ARBITRATION Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY- MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS Arbitration Forum: FINRA Case Initiated: 04/13/2009 Case Number: 09-01924 Disputed Product Type: MUTUAL FUNDS Sum of All Relief Requested: $279,293.11 Disposition: AWARD AGAINST PARTY Disposition Date: 05/04/2010 Sum of All Relief Awarded: $363,009.88 There may be a non-monetary award associated with this arbitration. Please select the Case Number above to view more detailed information. i Disclosure 2 of 3 Reporting Source: Regulator Type of Event: ARBITRATION Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY- MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY Arbitration Forum: FINRA Case Initiated: 07/13/2009 Case Number: 09-03797 Disputed Product Type: MUNICIPAL BOND FUNDS; MUTUAL FUNDS
©2021Sum ofFINRA. All ReliefAll rights Requested: reserved. Report about$202,062.73 CETERA FINANCIAL SPECIALISTS LLC 62 www.finra.org/brokercheck User Guidance
Sum of All Relief Requested: $202,062.73 Disposition: AWARD AGAINST PARTY Disposition Date: 10/28/2010 Sum of All Relief Awarded: $179,132.01 There may be a non-monetary award associated with this arbitration. Please select the Case Number above to view more detailed information. i Disclosure 3 of 3 Reporting Source: Regulator Type of Event: ARBITRATION Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY- MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE Arbitration Forum: FINRA Case Initiated: 01/18/2012 Case Number: 11-04612 Disputed Product Type: MUTUAL FUNDS Sum of All Relief Requested: $2,500,000.00 Disposition: AWARD AGAINST PARTY Disposition Date: 08/15/2013 Sum of All Relief Awarded: $1,082,609.01 There may be a non-monetary award associated with this arbitration. Please select the Case Number above to view more detailed information.
©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 63 www.finra.org/brokercheck User Guidance End of Report
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©2021 FINRA. All rights reserved. Report about CETERA FINANCIAL SPECIALISTS LLC 64