Commonwealth Financial Network

Kurta Law is investigating recommendations by Commonwealth Financial Network brokers. Investors who have lost money working with this brokerage firm should be aware that some of its brokers have records of alleged misconduct. Commonwealth Financial Network has faced regulatory fines of its own following allegations regarding overcharging for mutual funds.

Investors may have worked with Commonwealth Financial Network (CRD #: 8032) under a different name – it has a total of 144 alternate names listed on its FINRA BrokerCheck profile.

Fees and Conflicts of Interest

Investors should be aware of the fees and conflicts of interest disclosed in the Customer Relationship Summary (Form CRS) – the document that every brokerage firm is required to provide to firm customers by Regulation Best Interest.

• Commonwealth Financial Network offers both broker-dealer services and investment advisory services. Investors should know that recommended investments and the fees may depend on your financial professional’s designation.
• In addition to commissions and/or advisory fees, investors should know that Commonwealth Financial Network representatives also receive noncash reimbursements from certain investment products. This noncash compensation includes reimbursements for marketing expenses and business development costs, as well as travel-related costs, meals, and entertainment. Noncash compensation creates an incentive for financial professionals to recommend one product over another.
• Make sure you understand how your financial advisor or broker is compensated and ask how their conflicts of interest affect their recommendations.

Advisory Fees

• Advisory accounts charge asset-based fees.
• Wrap account programs typically charge higher fees than assets in traditional managed account programs.
• Certain products come with additional fees, such as the 12b-1 fees imposed by certain mutual funds.
• The more assets you have in your advisory account, the more you will charge in fees. Investment advisors therefore have an incentive to encourage you to increase your assets in your advisory account.

Broker/Dealer Services

• Brokerage firm transactions charge per-transaction fees, called “commissions.” These commissions create an incentive for brokers to encourage you to trade more often.
• Mutual funds, variable annuities, and insurance products all come with additional fees. Always review an investment’s prospectus to verify its fees.
• The Form CRS reveals that Commonwealth Financial Network has a clearing relationship with National Financial Services and has an incentive to recommend investments offered through the NFS platform.

Regulatory Actions

State and federal securities industry regulators are responsible for enforcing securities rules and regulations. Regulators who identify misconduct may order brokerage firms to pay fines and return funds to defrauded investors.

Kurta Law wants investors to be aware of the following regulatory actions on Commonwealth Financial Network’s detailed BrokerCheck record.

$20,000 Regulatory Fine in Connecticut Following Allegations Involving a Client with Cognitive Decline

On September 17, 2021, the Connecticut Securities and Business Investments Division alleged in a consent order that Commonwealth Financial Network violated securities regulations by failing to establish, enforce, and maintain a system for supervising the activities of its agents. Connecticut further alleged that Commonwealth Financial Network should have taken greater measures to ensure that a since-deceased Connecticut client, who the firm allegedly knew was suffering from mild cognitive decline, fully understood the ramifications of changing the beneficiaries on his brokerage account before the firm removed two of the client’s three children as beneficiaries.

The Consent Order fined the firm $20,000.

SEC Orders Repayment of $1.4 Million to Mutual Fund Investors

On March 11, 2019, the Securities and Exchange Commission alleged that Commonwealth Financial Network made inadequate disclosures regarding its mutual fund share class selection practices and the fees it received. Firm representatives allegedly recommended mutual funds that came with 12b-1 fees instead of lower-cost funds for which the clients were eligible. 12b-1 fees are paid to the firm, creating a conflict of interest.

Commonwealth Financial Network allegedly failed to disclose its conflicts of interest to its customers.

FINRA Alleged Commonwealth Financial Network Overcharged Investors for Mutual Funds

On November 9, 2018, Commonwealth Financial Network entered into an Acceptance, Waiver, and Consent agreement (AWC) with the Financial Industry Regulatory Authority (FINRA) to settle allegations that it sold investors unnecessarily expensive mutual fund share classes. The firm also allegedly failed to reasonably supervise the application of sales charge waivers to eligible mutual fund sales.

FINRA alleges that as a result, investors overpaid $766,295 for mutual fund purchases.

As part of the terms of the AWC, Commonwealth Financial Network agreed to pay investors $888,337, which is the amount customers overpaid plus interest. You can read a copy of the AWC here.

Broker Misconduct Allegations

Kurta Law is aware of the following current or former Commonwealth Financial Network brokers with BrokerCheck disclosures. This is not necessarily a complete list, and you should contact Kurta Law if you have any concerns about your broker’s conduct:

• Paul Miller: https://www.kurtalawfirm.com/blog/paul-miller/
• Michael Herbert: https://www.kurtalawfirm.com/blog/michael-hebert/
• Jeffrey Hejza: https://www.kurtalawfirm.com/blog/jeffrey-hejza/
• James Neel: https://www.kurtalawfirm.com/blog/james-neel/
• Mark Erwin: https://www.kurtalawfirm.com/blog/mark-erwin/
• Mariana Goldenberg: https://www.kurtalawfirm.com/blog/mariana-goldenberg/
• Sean Flynn: https://www.kurtalawfirm.com/blog/sean-flynn/
• Richard Rustic: https://www.kurtalawfirm.com/blog/richard-rustic/

Kurta Law Can Help

Investors who lost money working with a Commonwealth Financial Network broker should reach out to an investment fraud lawyer for help. Our attorneys offer free case evaluations and do not charge a fee unless we win your case. Call (877) 600-0098 or email info@kurtalawfirm.com.