FINRA Fines Cetera Firms $1.1 Million for Compliance Failures

FINRA censures Cetera Advisors and affiliates, citing weak supervisory systems, AML program failures, and reporting lapses. FINRA has fined Cetera Advisors LLC, Cetera Wealth Services LLC, and Cetera Investment Services LLC a total of $1.1 million for multiple compliance failures. The firms also received a censure and agreed to an undertaking as part of the enforcement action.

FINRA found that from at least March 2019 through August 2021, the Cetera firms’ supervisory systems, including written supervisory procedures, failed to meet reasonable standards for ensuring compliance with Section 5 of the Securities Act of 1933. The agency determined the deficiencies violated FINRA Rules 3110 and 2010, which require firms to maintain systems and procedures reasonably designed to achieve compliance with applicable securities laws and regulations.

FINRA Fines Cetera Firms $1.1 Million for Compliance Failures

During the same period, FINRA identified significant gaps in the firms’ anti-money laundering compliance program. The regulator concluded the program was not reasonably designed to detect and report suspicious transactions, in violation of FINRA Rules 3310(a), 3310(f)(ii), and 2010. The findings highlight shortcomings in monitoring, review, and reporting mechanisms intended to identify potentially illicit activity.

In a separate set of violations, FINRA cited Cetera Advisors LLC for failures related to consolidated reports. From at least January 2017 through August 2021, the firm did not reasonably supervise the creation and dissemination of consolidated reports and failed to preserve these documents as required. FINRA said these actions violated Section 17(a) of the Securities Exchange Act of 1934, Exchange Act Rule 17a-4(b)(4), and FINRA Rules 3110, 4511, and 2010.

FINRA’s action underscores the regulator’s focus on supervisory and compliance controls, particularly in areas tied to investor protection and anti-money laundering obligations. The censure, fine, and undertaking aim to address the identified compliance gaps and reinforce expectations for robust systems and procedures within broker-dealer operations.

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