Broker-Dealers

Finra fines Cetera $75,000 for records snafu

Brokerage firm failed to notify customers of changes in their account records as a result of a computer coding error, regulator claims.

Finra has fined Cetera Investment Services, a subsidiary of Cetera Financial Group Inc., a $75,000 fine for allegedly failing to notify clients of changes to their account records, according to a document released Monday.
From October 2008 through November 2013, a total of 57,881 notifications about changes to client account records, including name, address and investment objective of accounts, were not sent out to customers, according to the Financial Industry Regulatory Service Inc.
Under the current securities law, a firm is required to create and maintain an account record for each customer and notify them in cases of any changes.
In 2008, certain former Cetera customers stated that they continued to receive notices about account changes even after leaving the firm. To correct this error, Cetera used a computer code that stopped notifications from being sent to the former customers, but inadvertently, to some currents ones as well, alleges Finra.
The error caused by the faulty computer coding was not detected by Cetera since they lacked the procedures to supervise proper generation and mailing of such notices, claims Finra.
Cetera has neither accepted nor denied the charges.
“We are pleased to put this administrative matter behind us, while also strengthening our procedures that are designed to prevent a recurrence of this issue,” said a company spokesman for Cetera Financial Group.