Cetera Advisors Fair Fund

Persons, or their lawful successors, identified by the Distribution Agent based on its review and analysis of applicable records obtained by the Commission during its investigation who may have suffered a loss as a result of paying 12b-1 Fees or Markups to Defendants that the Commission alleged were not properly disclosed in connection with investment advisory or brokerage services during the Relevant Period may be entitled to a Distribution Payment from the Fair Fund established by the Court in the above-referenced matter (the “Cetera Advisors Fair Fund”).

Epiq Class Action & Claims Solutions, Inc. (“Epiq”), has been appointed by the Court as the Distribution Agent (the “Distribution Agent”). Please read the Plan Notice, this website, the Distribution Plan (the “Plan”) and the Plan of Allocation attached thereto carefully. You can access the Distribution Plan and the Plan Notice on the Important Documents page of this website. The Certification Form included with the mailed Plan Notice (a blank version is available on the Submit a Certification page) provides you with the opportunity to review and confirm or dispute your Excess Fee amounts so that you may receive your payment from the Cetera Advisors Fair Fund. Please be advised that you must either confirm or dispute your Excess Fee amounts and return a Certification Form to be eligible for a Distribution Payment.

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You can download a blank copy of the Certification Form here.

If you wish to file your Certification Form online, you may follow the instructions on the Submit a Certification page.

Additional information regarding the Fair Fund may be found in the Plan Notice and on the Frequently Asked Questions (FAQs) of this website. You may obtain additional information by calling the Fair Fund’s toll-free hotline at 1-877-267-0136 or by emailing Info@CeteraAdvisorsFairFund.com.

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Background:

On October 11, 2019, the SEC filed its Amended Complaint against Defendants alleging that Cetera invested and held clients in mutual fund share classes that charged 12b-1 Fees—which are recurring fees deducted from the fund's assets—even when it knew these clients were eligible to invest in lower-cost shares of the same funds without 12b-1 Fees. Clients whom Cetera invested in the higher-cost, otherwise identical share classes, paid additional compensation to Cetera for as long as they held these investments. The Complaint also alleged that Cetera participated in a program offered by its clearing broker whereby it agreed to share with Cetera revenues and service fees it received from certain mutual funds. As a result, Cetera had an incentive to favor these mutual funds in the program over other investments when advising clients. The Complaint further alleged that Cetera directed its clearing broker to mark-up certain fees charged to Cetera's advisory clients which Cetera then received indirectly from these same clients.

According to the Complaint, Cetera failed to adequately disclose to its advisory clients each of these practices and the conflicts of interest associated with them. As a result of these failures, the SEC alleged that Cetera generated over $10 million in undisclosed compensation. The Complaint charged Cetera with violations of Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder [15 U.S.C. §§ 80b-6(2), 80b-6(4), 80b-7 and 17 C.F.R. § 275.206(4)-7].

Defendants consented to the entry of a Final Judgment against them without admitting or denying the Complaint's allegations, enjoining them from violating the provisions of the federal securities laws that are the subject of the allegations in the Complaint. The Court entered the Final Judgment on October 13, 2022. In the Final Judgment, the Defendants were ordered to jointly or severally pay disgorgement of $5,614,509; prejudgment interest of $990,961; and combined penalties of $2,000,000. The total amount ordered to be paid by all Defendants was $8,605,470. Defendants satisfied this obligation and made full payment to the Commission. The funds are being held in an SEC-designated account with the United States Department of the Treasury.

On July 14, 2023, the Court established a Fair Fund so that the penalties, disgorgement, and prejudgment interest collected can be distributed to harmed investors. On the same day, the Court appointed Heffler, Radetich & Saitta, LLP as Tax Administrator for the Fair Fund. On November 16, 2023, the Court appointed Epiq Class Action & Claims Solutions, Inc., as Distribution Agent for the Fair Fund.

To date, the Defendants have paid a total of $8,605,470.00. The Fair Fund has been deposited at the United States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for investment.

A copy of the Court’s Order Appointing the Distribution Agent, the Order Approving Distribution Plan and the Order Establishing Fair Fund are posted on the Documents tab of this website located here. As well as on the SEC’s Information for Harmed Investors website, which can be found here: https://www.sec.gov/enforcement/information-for-harmed-investors/cetera.