Articles Tagged with Cetera Advisors

Chicago based Stoltmann Law Offices represents victims of identity and data-breaches nationwide in class representation or FINRA arbitration to recover damages caused from data breaches by brokerage firms, investment companies, and other institutions which are obligated to keep your private information safe.  We are currently investigating claims made by the Maine Attorney General’s office which was reported this week against Cetera Financial Group.  According to the the report, the Social Security numbers of 2,188 Cetera clients were potentially exposed when a printer company used by Cetera, R.R. Donnelly, was reportedly hacked.

The cybersecurity of proprietary information for brokerage firm clients is a huge issue for regulators. As the world continues to be run through electronic means using the internet and electronic storage networks, the security of those systems is of paramount importance.  Hackers gain access to this information and then sell it en masse on the dark web to criminals who will use the credentials they obtain to hack into the personal financial accounts and cellular phone accounts of unsuspecting victims sometimes to ruinous ends.  If you have been notified by Cetera that your information was potentially exposed or compromised, you have legal claims that can be pursued against both Cetera and R.R. Donnelly.  These companies have strict compliance obligations to ensure these hacks do not happen. In some instances, these hacks are the result of poor security controls and could be preventable.

In January 2021, it was reported that thousands of Voya Financial Advisors’ clients’ personal identifiable information was exposed as the result of a Russian hack. As a result of that hack, Voya Financial Advisors paid a $1 million fine to the Securities and Exchange Commission The SEC Order and fine was based on the allegations that Voya Financial lacked sufficient written policies and procedures to ensure compliance with Rule 30 of Regulation S-P, 17 C.F.R. § 248.30(a), known as the “Safeguard Rule”. The SEC also alleged that Voya Financial failed to develop and implement a written Identity Theft Prevention Program, in violation of Rule 201of Regulation S-ID, 17 C.F.R. § 248.201, which is known as the Identity Theft Red Flags Rule.

Chicago-based Stoltmann Law Offices represents investors who’ve suffered losses from alternative investments. Some brokers like to pitch investors on the idea of making a lot of money by investing in alternative investments, mostly because brokers get paid handsome commissions for selling them.  GPB Capital and more recently, GWG Holdings are examples of alternative investments that were pushed hard by brokerage firms, with terrible results. There is a sub-category of these investments called “liquid alternative”, which are complex and costly for clients.

FINRA, the U.S. securities industry regulator, recently issued a warning about liquid “alts,” which invest in assets “other than stocks and bonds — such as real estate, commodities and derivatives — to give retail investors exposure to alternative investments in a vehicle that can be traded daily. They are touted as a way to beat market returns but also can be risky and expensive.”

“While these funds may be appropriate for some investors,” the regulator’s warning stated, “FINRA has consistently emphasized the importance of member firms’ sales practice obligations for these and other products, especially when such products may carry additional risks for customers.” These products are inappropriate for investors unless their objective is speculation – plain and simple.

Stoltmann Law Offices, P.C., a Chicago-based securities, investment, and consumer protection law firm offering representation on a contingency fee basis to investors and victims nationwide, is concerned about the slow drip of news coming out of Bermuda about the NorthStar Financial liquidation. Recently, investors received a letter from the NorthStar informing them about the appointment of  representatives for the various investor classes. These representatives would serve the function similar to a creditor’s committee in US bankruptcy court. These representatives would stand in the shoes of and represent the investors from each class of NorthStar investors. The Chief Judge overseeing the liquidation in Bermuda along with the group known as the “joint provisional liquidators” will ultimately choose the representatives.

Regardless of how this liquidation ultimately unfolds, investors need to realize they are looking at substantial losses on their annuities and insurance contracts. There does not appear to be assets sufficient to make investors whole, really, nowhere close to it.  As this liquidations process unfolds and crawls along through this process, investors hoping for a miracle, need to splash some cold water on their face and look to other options to recover their investment losses.

If you were sold your NorthStar Bermuda insurance or annuity contracts by a U.S.-based financial advisor, broker, or investment advisor, you could have viable claims to pursue against the brokerage firm that employed the advisor at the time of sale.  These actions cannot be filed in a U.S. Court. Instead, pursuant to the contract binding you, the investor/client, to the brokerage firm, you must submit all disputes to arbitration through the Financial Industry Regulatory Authority (FINRA).  The FINRA Arbitration process is simpler than filing a claim in court. There are no depositions and motion practice is limited, specifically, motions to dismiss which bar claims for legal reasons without being heard. In FINRA Arbitration, these sorts of motions to dismiss are greatly limited, making it easier for investors to gain access to the discovery they need from the brokerage firm to win their case.

Chicago-based Stoltmann Law Offices continues to hear from investors who’ve suffered losses from dealing with financial advisor who sold them annuity products from Bermuda-based Northstar Financial Services. Northstar filed for bankruptcy last year. Investors have been filing claims as the company is being liquidated by the Bermuda Monetary Authority. Investors across the world are filing claims against Northstar and the many brokerage/financial firms that sold these “annuities” to investors.

One Japanese investor, for example, contends her “Bancwest Investment Services broker proposed a Northstar investment rather than keeping her money in savings and checking accounts.” She is just one of many investors who are filing claims against brokers through FINRA Dispute Resolution, charging they unsuitably recommended and sold Northstar’s fixed- and variable-rate annuity and other products that proved to be unsafe.

“Investors in Northstar Financial wanted their money and the company was unable to pay liquidation or redemption requests,” according to David Fox in the Royal Gazette. “The company was estimated to have incurred a deficit upwards of $260 million. By September 2020 they were reporting just $8 million in assets, and they filed for bankruptcy protection in 2020.”

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with broker-advisors affiliated with the Cetera financial group.  The securities regulator FINRA recently fined three Cetera Financial Group broker-dealers $1 million, claiming that Cetera’s “supervisory systems and procedures were deficient when handling securities transactions.”

Like many advisory firms, Cetera employs representatives who are “dually registered,” meaning they are broker-dealers and registered investment advisers. In the Cetera case, their representatives managed more than $80 billion in assets across 47,000 accounts. According to U.S. Securities and Exchange Commission (SEC) exams conducted in 2013, 2015 and 2017, Cetera was “aware of the supervisory deficiencies.”

Without admitting or denying the allegations, Cetera recently signed a FINRA letter of Acceptance, Waiver, and Consent and agreed to FINRA’s sanctions, which included a censure and an agreement that they would review and revise, as necessary, systems, policies and procedures related to the supervision of dually-registered reps’ securities transactions, according to

AdobeStock_198259345-300x200Our firm is investigating allegations made against Stephen C. Carver, who was a registered representative for Cetera Advisors in Peoria, Illinois. According to his FINRA BrokerCheck Report, an investor sued Cetera and Mr. Carver in FINRA Arbitration for upwards of $3 million. The complaint makes allegations of elder abuse, conversion, breach of fiduciary duty, and violations of both Illinois and Federal statutory and consumer protection statutes. The claim was filed in October 2018 and involves direct-participation programs, limited partnerships or also known as Private Placements.

Mr. Carver has several disclosures on his BrokerCheck Report in addition to this recent complaint. He was terminated by LPL Financial in 2009 for failing to disclose his involvement in an outside business, which is major red flag to brokerage compliance departments. He also discloses several tax liens on his record. He was then terminated by Cetera for failing to disclose a gift he received from a client, who he stated was his uncle.

Mr. Carver was also named in a Regulatory Complaint filed by FINRA for failing to disclose tax liens on his Form U-4.  FINRA’s By-Laws, specifically Article V, Section 2(c) require all financial advisors update their U-4 with information required to be disclosed within thirty days of learning of the event requiring the disclosure.  Tax liens are specifically disclosable events that financial advisors like Mr. Carver are obligated to report within thirty days or they are violating FINRA By-Laws along with FINRA Rule 1122 and FINRA Rule 2010.

AdobeStock_41845221-300x212Stoltmann Law Offices is investigating former Cetera Advisors broker Craig Blattner, who was recently fined and suspended by the Financial Industry Regulatory Authority (FINRA). Blattner was fined $5,000 and suspended from the industry for 15 business days. FINRA found that the value of a joint account of two clients served by Blattner allegedly declined by $75,000. One of his clients complained to him via email about his management of their account and the losses they suffered. Blattner did not disclose the client’s complaint to the firm, and it was never reported on his Form U4. Instead, Blattner wrote the client a $15,000 check from his personal checking account, which is against securities laws.
Previously, Craig Blattner was registered with The Stuart-James Company, National Securities Corp, First Montauk Securities Corp, Gunnallen Financial, Investors Captial Corp in Longwood, Florida from May 2006 until October 2016, and Cetera Advisors in Longwood, from September 2016 until February 2018. He has three customer disputes against him, and one regulatory matter. He is not currently registered as a broker within the industry, according to his online, FINRA BrokerCheck report.

According to a recent InvestmentNews article, the Financial Industry Regulatory Authority (FINRA), ordered five Cetera Financial Group broker-dealers to pay $3.3 million for failing to supervise the application of mutual fund sales charge waivers to eligible clients in retirement plans and at charitable organizations. The five firms are Cetera Investment Services, Cetera Financial Specialists, First Allied Securities, Summit Brokerage Services and Girard Securities Inc. The firms allegedly overcharged client from July 2009 until July 2017. In May, FINRA reached a settlement with Cetera Advisor Networks for overcharging retirement plan and charitable organization clients to $1.7 million since 2009. According to FINRA, the Cetera firms “failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales. The firm relied on its financial advisers to determine the applicability of sale charge waivers, but failed to maintain adequate written policies or procedures to assist financial advisers in making this determination.” Cetera Investment Services will pay $1.4 million in restitution to clients, while Cetera Financial Specialists will pay $572,000. First Allied and Summit Brokerage Services will pay $877,000 and $357,000, respectively. Girard Securities will pay $103,000. Please call our Chicago-based law firm today to find out how you may be able to recover your losses with Cetera on a contingency fee basis.


AdobeStock_17723177-1-300x175George C. Merhoff, a Cetera Advisors broker in Klamath Falls, Oregon, allegedly recommended numerous oil and gas and energy investments which were high-risk and illiquid. These included Linn Energy, Pengrowth Energy, and Amerigas Partners. Merhoff also allegedly recommended illiquid alternative investments including Cypress Income Funds and ICON 12, when he was registered with Pacific West Securities. Merhoff also allegedly made a number of unsuitable investment recommendations to a client, and he and Cetera had previously been the subject of of a regulatory action by the Oregon Division of Financial Regulation, which alleged that Merhoff inappropriately concentrated his clients’ investments in oil and energy stocks. Oil and gas and energy investments tend to be risky and illiquid ones, that are not suitable for all investors, since the price of oil and significantly declined. A broker must take into account a customer’s age, net worth, investment objectives and risk, as well as sophistication. If he does not, his brokerage firm may be responsible for losses on a contingency fee basis.
According to public record, Merhoff was registered with AAG Securities in Cincinnati, Ohio from September 1997 until March 1998, and Pacific West Securities in Klamath Falls, Oregon from June 1998 until February 2012. He is currently registered with Cetera Advisors in Klamath Falls and Monroe, Oregon, and has been since February 2012. He has two criminal final dispositions against him and has 14 customer disputes against him, 10 of which are currently pending. Please call our Chicago and Barrington, Illinois-based securities law firm at 312-332-4200 for a no-cost, no-obligation consultation with one of our attorneys. We take cases on a contingency fee basis only.

According to a recent Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA), Christopher R. Hickman was terminated from Cetera Advisors for “frequent short-term fixed-income securities trading in customer accounts under firm review.” Allegedly, between May 2011 and April 2014, Hickman engaged in an unsuitable pattern of short-term trading of UITs or unit investment trusts in six customer accounts. For this, he was fined $5,000 and suspended from the industry for five months. According to his online FINRA BrokerCheck report, Mr. Hickman was previously registered with A.G. Edwards & Sons in St. Louis, Missouri from March 2001 until July 2005, Raymond James in Boynton Beach, Florida from June 2005 until March 2006, Banc of America Investment Services in Boca Raton, Florida from March 2006 until August 2009 and Cetera Advisors in Delray Beach, Florida from September 2009 until July 2015. He has seven customer disputes against him, one of which is currently pending. He is currently not registered within the industry. If you or someone you know suffered losses with Hickman, you may be able to sue Cetera Advisors. Cetera has an ironclad obligation to reasonably supervise Mr. Hickman, and, if it does not, can be held liable for losses. Please call our Chicago-based law firm today at 312-332-4200 to find out how you may be able to recover your losses on a contingency basis, which means we only get paid if you recover money.

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