Cambridge Investment Research Faces FINRA Review and SEC Penalties

Posted on July 19th, 2024 at 11:15 AM
Cambridge Investment Research Faces FINRA Review and SEC Penalties

From the desk of Jim Eccleston at Eccleston Law

Cambridge Investment Research is under review by FINRA's examination staff and anticipates making a $500,000 restitution payment to certain clients in 2024. The review focuses on Cambridge's procedures for providing fee waivers, rebates, and discounts through rights of reinstatement. As reported by ThinkAdvisor, the firm voluntarily decided to reimburse clients who did not receive those benefits and has accrued this liability for 2023.

In addition to the FINRA review, Cambridge Investment Research Advisors Inc. (the company's RIA) is involved in an enforcement action filed by the SEC on March 1, 2022. The SEC alleges that the RIA invested client assets in mutual funds and money market sweep funds that generated substantial revenue-sharing payments to Cambridge's broker-dealer, rather than in lower-cost share classes and investment options that would have yielded less or no revenue sharing. This case remains pending.

According to ThinkAdvisor, Cambridge's recently filed Form ADV disclosed a $5.74 million liability accrued in 2023 related to the SEC's review of its off-channel communication practices. Furthermore, in February 2024, Cambridge and its RIA unit agreed to a settlement that included a $10 million fine. The settlement is part of a broader agreement involving 16 firms, collectively paying over $81 million in total penalties.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra, sec

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