Practice Management
Commonwealth wins reversal of $93m SEC fine over revenue sharing
Sam Bojarski / Apr 02, 2025
Just days after selling itself for $2.7bn to LPL, Commonwealth has secured a reversal of a previous ruling that it had to pay the SEC $93m in penalties over allegations about its revenue-sharing disclosures.
A federal appeals court has vacated a lower court ruling that demanded broker-dealer Commonwealth Financial Network pay roughly $93m in summary judgement and disgorgement to the Securities and Exchange Commission (SEC) over alleged disclosure failures.
The appeals court ruling is the latest twist in a five-year legal battle between Commonwealth and the regulator that has played out in a Massachusetts federal court.
The SEC in 2019 sued Commonwealth, which now has about $285bn in advisory and brokerage assets, saying the firm did not disclose to clients that it had a revenue sharing agreement with Fidelity-affiliated clearing broker National Financial Services (NFS).
Regulators said the agreement incentivized Commonwealth to put client assets into mutual funds that had no transaction fees or higher-fee share classes, from which it earned more money. When the SEC filed suit, it said that Commonwealth brought in more than $100m in improper revenue sharing between 2014 and 2018, and that Commonwealth...
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Practice Management
citywire ria
Apr 10, 2025
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