SSEK Investigating Ex-Commonwealth Financial Network Broker
SSEK Law Firm is meeting with investors who suffered losses while working with former Commonwealth Financial Network broker, Gerald Allan Eaton, or another financial representative from the firm.
Eaton was recently barred by the Financial Industry Regulatory Authority (FINRA) in the wake of allegations that he fraudulently took money out of his clients’ accounts. Commonwealth fired him last month, claiming it had found that he’d engaged in “serious misconduct” that involved “fraudulently facilitated distributions” from accounts that were not for clients’ benefit and without letting them know or getting their permission.
Eaton agreed to the bar but has not denied or admitted to the self-regulatory organization (SRO’s) findings. He was a registered Commonwealth Financial broker from 1995 to 2019. Previous to that, with 27 years in the industry since 1992, he was registered with two other broker-dealers that are not named on his BrokerCheck record.
Other Commonwealth Financial Brokers Are The Subject Of Fraud Claims
Eaton is not the only ex-Commonwealth Financial broker to recently get in trouble with regulators. Earlier this year, Massachusetts Secretary of the Commonwealth, William Galvin, filed fraud charges against Bruce Worthington, who was based in the state, accusing him of misappropriating almost $100K from a retiree’s account. Worthington had already been barred by FINRA in late 2018.
While Commonwealth Financial Network is headquartered in Massachusetts, it has brokers located in other parts of the US. Commonwealth broker, James Austin King III, who is based in North Carolina, has been the subject of a number of customer disputes over the last several years.
Most of the claims allege that he encountered claimants to retire early and promised them an inflated return rate. These FINRA arbitration cases, noted on his BrokerCheck record, have been resolved with either a settlement or damages award. The largest award issued was $580K which Commonwealth paid.
Commonwealth Financial Group Accused Of Civil Charges By SEC
In August, it was Commonwealth Financial Network that found itself dealing with civil charges when the US Securities and Exchange Commission (SEC) accused it of not telling clients about material conflicts of interest related to certain mutual funds. These conflicts purportedly allowed the broker-dealer and investment advisor to earn over $100M in revenue sharing.
At issue was an agreement between Commonwealth Financial and Fidelity Investments clearing and custody unit, National Financial Services (NFS), in which the former received a cut of what the latter got paid by some mutual fund companies for certain trades made on the NFS platform.
Commonwealth was also accused by the SEC of not telling clients they could have invested in less expensive mutual fund share class options. Instead, about $174M in client monies were invested in the costliest share class options, allowing Commonwealth to earn $515K from the revenue sharing deal.
Brokerage Firm Negligence
Broker-dealers have a responsibility to properly supervise their registered representatives to ensure that they don’t engage in fraud, negligence, or other misconduct.
A failure to supervise can lead to brokerage firm misconduct and negligence claims, as can overcharging clients, selling them more costly investments when less expensive alternatives are available, and not disclosing conflicts of interest.
Contact our broker fraud lawyer at SSEK Law Firm if you suffered losses while working with a Commonwealth Financial Network broker or any other broker so that we can help you explore your legal options.