Cetera Fined $200K for Supervisory Failures
Self-regulator Finra has fined Cetera Financial Specialists $200,000 for failing to supervise one of its former representatives who allegedly misused $75,500 of his clients’ money, according to a letter of acceptance, waiver and consent released by the industry organization.
Between January 2012 and December 2014, Cetera allegedly failed to have in place a supervisory system capable of detecting when the business activities of its registered representatives interfered with their responsibilities to the firm and their clients, Finra says. More specifically, Cetera allegedly failed to review and address the outside business of Alex Anderson, who during the period in question was a registered representative for and held power of attorney over the accounts of a 94-year-old client and her 75-year-old son, according to the letter of consent.
By virtue of the power of attorney, Anderson had been authorized to withdraw funds from their accounts and was a beneficiary of the older client’s estate, Finra says. Anderson allegedly disclosed, in three separate instances, his power of attorney over both clients’ accounts to Cetera, according to the letter. The firm’s policies and procedures, however, prohibited its representatives from taking on fiduciary duties for non-family member accounts, Finra says. But the firm allegedly failed to do a timely review of Anderson’s disclosures and then postponed a review while it reassessed its policies on approving representatives’ requests to act as fiduciaries for non-member clients, according to the letter.
Finra barred Anderson from the industry in 2015 following findings he had used at least $75,500 from the older client’s bank account for his own benefit, according to his BrokerCheck profile.