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BrokerCheck Report

COMMONWEALTH FINANCIAL NETWORK

Section Title

Report Summary

Firm History

CRD# 8032

1

12

Firm Profile 2 - 11

Page(s)

Firm Operations 13 - 18

Disclosure Events 19

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COMMONWEALTH FINANCIALNETWORK

CRD# 8032

SEC# 8-24040

Main Office Location

29 SAWYER ROADWALTHAM, MA 02453-3483Regulated by FINRA Boston Office

Mailing Address

29 SAWYER ROADWALTHAM, MA 02453-3483

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

781-736-0700

https://www.adviserinfo.sec.gov

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 23

Civil Event 1

Arbitration 16

Bond 1

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Massachusetts on08/01/2017.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 16 types of businesses.

This firm is not affiliated with any financial orinvestment institutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 53 U.S. states and territories

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1©2020 FINRA. All rights reserved. Report about COMMONWEALTH FINANCIAL NETWORK

https://adviserinfo.sec.gov/firm/summary/8032


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This firm is classified as a limited liability company.

This firm was formed in Massachusetts on 08/01/2017.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.

COMMONWEALTH EQUITY SERVICES, LLC

SEC#

8032

8-24040

Main Office Location

Mailing Address

Business Telephone Number

Doing business as COMMONWEALTH FINANCIAL NETWORK

781-736-0700

Regulated by FINRA Boston Office








This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

1979 HOLDING COMPANY, LLC

SHAREHOLDER

75% or more

No

Domestic Entity

08/2017

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


ADELMAN, JAMES BERNARD

GENERAL COUNSEL, SENIOR VICE PRESIDENT

Less than 5%

No

Individual

06/2004

Yes



Position


Position Start Date


BIRKE, KOL

MANAGING PRINCIPAL, TECHNOLOGY & CORPORATE STRATEGY

Less than 5%

Individual

04/2019

Yes

4556441








Direct Owners and Executive Officers (continued)

Firm Profile



No

Yes

Position



Position Start Date


BLOOM, WAYNE MICHAEL

CHIEF EXECUTIVE OFFICER

Less than 5%

No

Individual

01/2009

Yes

2014352



Position



Position Start Date


BOHS, JONATHAN CHRISTIAAN

SENIOR VICE PRESIDENT, BROKERAGE OPERATIONS

Less than 5%

No

Individual

05/2013

Yes

2308915



DEITCH, JOSEPH SAMUEL

Individual

840025









Firm Profile

Position



Position Start Date


CHAIRMAN

Less than 5%

No

Individual

07/1996

Yes


Position



Position Start Date


HUNTER, RICHARD MARCUS

PRESIDENT EMERITUS

Less than 5%

No

Individual

05/2013

Yes

1913536



Position


Position Start Date


KELLY, DAVID LINUS

MANAGING PRINCIPAL, TRADING AND BROKERAGE OPERATIONS

Less than 5%

Individual

01/1999

Yes

1597375









Firm Profile



No

Yes

Position



Position Start Date


KLOMAN, CHRISTOPHER ANTHONY TRAPNELL

CHIEF FINANCIAL OFFICER, CHIEF OPERATIONS OFFICER, PRESIDENT

Less than 5%

No

Individual

07/2015

Yes

4896179



Position



Position Start Date


MCMILLAN, WILLIAM BRADFORD

MANAGING PRINCIPAL, CHIEF INVESTMENT OFFICER

Less than 5%

No

Individual

02/2009

No



ROONEY, JOHN JAMES

Individual

1410648









Firm Profile

Position



Position Start Date


MANAGING PRINCIPAL

Less than 5%

No

Individual

09/1988

Yes


Position



Position Start Date


TOLLEY, PAUL JONATHAN

MANAGING PRINCIPAL, CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

08/2006

Yes

2077337



Position


Position Start Date


WHEELER, PETER TOMPKINS

VICE CHAIRMAN

Less than 5%

Individual

05/2013

Yes

1286415









Firm Profile



No

Yes






This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

CFN HOLDING COMPANY, LLC

SHAREHOLDER

CFN VENTURES, LLC

75% or more

No

Domestic Entity

08/2017

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established




CFN VENTURES, LLC

SHAREHOLDER

1979 HOLDING COMPANY, LLC

75% or more

No

Domestic Entity

08/2017

Yes









GRATITUDE HOLDINGS, INC.

LEVEL ABOVE, LLC

Domestic Entity









Indirect Owners (continued)

Firm Profile

SHAREHOLDER

LEVEL ABOVE, LLC

75% or more

No

11/2018

Yes







LEVEL ABOVE, LLC

SHAREHOLDER

CFN HOLDING COMPANY, LLC

75% or more

No

Domestic Entity

11/2018

Yes









MATTHEW FLETCHER DEITCH 2010 FAMILY GIFT TRUST - JOSEPH S.DEITCH, TRUSTEE

SHAREHOLDER

GRATITUDE HOLDINGS, INC.

Domestic Entity

08/2017





Relationship Established10©2020 FINRA. All rights reserved. Report about COMMONWEALTH FINANCIAL NETWORK





Indirect Owners (continued)

Firm Profile

25% but less than 50%

No

08/2017

Yes





DEITCH, JOSEPH SAMUEL

TRUSTEE

MATTHEW FLECTCHER DEITCH 2010 FAMILY GIFT TRUST

Other General Partners

No

Individual

08/2017

Yes

840025














Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

08/01/2017Date of Succession:

This firm was previously:

Predecessor SEC#:

COMMONWEALTH EQUITY SERVICES, INC.

8-24040

8032Predecessor CRD#:

Description COMMONWEALTH EQUITY SERVICES, INC., CONVERTED TOCOMMONWEALTH EQUITY SERVICES, LLC. IN MA, A CONVERSIONCHANGES THE FORM OF ORGANIZATION, BUT THE RIGHTS, PRIVILEGES,POWERS AND OBLIGATIONS OF THE EXISTING BUSINESS ENTITY AREVESTED IN THE LLC UPON CONVERSION. THE CONVERSION DID NOTRESULT IN CHANGES TO THE CONTROL PERSONS, MANAGEMENTPERSONNEL, BUSINESS LINES, OPERATIONS, OR SUPERVISORYSTRUCTURE. THE APPLICANT IS ACQUIRING ALL OR A MAJOR PORTION OFTHE ASSETS AND LIABILITIES OF THE PREDECESSOR.

08/01/2017Date of Succession:

This firm was previously:

Predecessor SEC#:

COMMONWEALTH EQUITY SERVICES, INC.

8-24040

8032Predecessor CRD#:

Description COMMONWEALTH EQUITY SERVICES, INC. ("CESINC."), A MASSACHUSETTSS-CORP, CONVERTED TO COMMONWEALTH EQUITY SERVICES, LLC("CESLLC"), A MASSACHUSETTS LIMITED LIABILITY COMPANY. IN MA, ACONVERSION CHANGES THE FORM OF ORGANIZATION, BUT THE RIGHTS,PRIVILEGES, POWERS AND OBLIGATIONS OF THE EXISTING BUSINESSENTITY ARE VESTED IN THE LLC UPON CONVERSION. THE CONVERSIONDOES NOT RESULT IN CHANGES TO THE CONTROL PERSONS,MANAGEMENT PERSONNEL, BUSINESS LINES, OPERATIONS, ORSUPERVISORY STRUCTURE.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 09/07/1979

Self-Regulatory Organization Status Date Effective

FINRA Approved 11/06/1979






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 10/06/1988

Alaska Approved 01/22/1991

Arizona Approved 05/11/1986

Arkansas Approved 07/29/1988

California Approved 09/13/1985

Colorado Approved 03/12/1986

Connecticut Approved 07/16/1981

Delaware Approved 08/30/1984

District of Columbia Approved 03/16/1985

Florida Approved 04/27/1983

Georgia Approved 03/02/1987

Hawaii Approved 06/14/1991

Idaho Approved 02/07/1991

Illinois Approved 03/04/1985

Indiana Approved 08/15/1988

Iowa Approved 03/12/1991

Kansas Approved 03/23/1989

Kentucky Approved 08/13/1990

Louisiana Approved 01/30/1991

Maine Approved 03/21/1984

Maryland Approved 01/15/1985

Massachusetts Approved 07/31/1981

Michigan Approved 10/22/1985

Minnesota Approved 01/23/1990

Mississippi Approved 07/24/1991

Missouri Approved 12/07/1990

Montana Approved 07/28/1986

Nebraska Approved 04/22/1991

Nevada Approved 03/17/1986

New Hampshire Approved 02/01/1983

New Jersey Approved 05/25/1984

New Mexico Approved 08/03/1988

New York Approved 11/15/1982

U.S. States &Territories

Status Date Effective

North Carolina Approved 01/04/1989

North Dakota Approved 10/24/1989

Ohio Approved 04/16/1987

Oklahoma Approved 06/04/1990

Oregon Approved 04/04/1989

Pennsylvania Approved 01/09/1981

Puerto Rico Approved 04/19/2001

Rhode Island Approved 03/20/1984

South Carolina Approved 09/23/1988

South Dakota Approved 02/28/1991

Tennessee Approved 03/08/1988

Texas Approved 03/12/1984

Utah Approved 07/12/1991

Vermont Approved 02/19/1986

Virgin Islands Approved 09/16/2005

Virginia Approved 06/27/1985

Washington Approved 02/04/1987

West Virginia Approved 02/27/1989

Wisconsin Approved 01/08/1986

Wyoming Approved 03/18/1986






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

This firm currently conducts 16 types of businesses.

Types of Business

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund retailer

U S. government securities broker

Municipal securities dealer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Investment advisory services

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Broker or dealer selling tax shelters or limited partnerships in the secondary market

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Broker or dealer involved in a networking, kiosk or similar arrangment with a: insurance company or agency






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: NATIONAL FINANCIAL SERVICES LLC

Business Address: 82 DEVONSHIRE STREETBOSTON, MA 02109

CRD #: 13041

Effective Date: 11/02/1988

Description: COMMONWEALTH EQUITY SERVICES, INC, AS INTRODUCING BROKER-DEALER, HAS A FULLY DISCLOSED CLEARING ARRANGEMENT WITHNATIONAL FINANCIAL SERVICES CORPORATION, 82 DEVONSHIRESTREET, BOSTON, MA 02109.

Name: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560


Description: COMMONWEALTH EQUITY SERVICES, INC, AS INTRODUCING BROKER-DEALER, HAS A FULLY DISCLOSED CLEARING ARRANGEMENT WITHPERSHING, A DIVISION OF DONALDSON, LUFKIN & JENRETTESECURITIES CORP., ONE PERSHING PLAZA, JERSEY CITY, NJ 07399.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing

Name: IRON MOUNTAIN

Business Address: 745 ATLANTIC AVENUEBOSTON, MA 02111


Description: COMMONWEALTH HAS AN AGREEMENT WITH IRON MOUNTAIN TOPROVIDE STORAGE OF CERTAIN FIRM BOOKS AND RECORDSPURSUANT TO RULE 17A-4 OF THE SECURITIES AND EXCHANGE ACTAND 204-2 OF THE INVESTMENT ADVISERS ACT.



CRD #: 13041


Description: COMMONWEALTH EQUITY SERVICES, INC HAS AN AGREEMENT WITHNFSC FOR TRADING ACCOUNT PURPOSES.



CRD #: 13041


Description: COMMONWEALTH EQUITY SERVICES, INC HAS A FULLY DISCLOSEDCLEARING ARRANGEMENT WITH NFSC.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is not, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 23 0

Civil Event 1 0 0

Arbitration N/A 16 N/A

Bond N/A 1 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 23

Reporting Source: Regulator

Allegations: IA RELEASE 40-5132 / MARCH 11, 2019: THE SECURITIES AND EXCHANGECOMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THATPUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED AGAINST COMMONWEALTH EQUITY SERVICES, LLC("RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'SOFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUTOF BREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BYTHE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARECLASS SELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMESDURING THE RELEVANT PERIOD, RESPONDENT PURCHASED,RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARECLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARECLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE.RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESEINVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OROTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPTOF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARECLASSES THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD,RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVESTIN OR HOLD SUCH MUTUAL FUND SHARE CLASSES. AS A RESULT OF THECONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207OF THE ADVISERS ACT.

Current Status: Final






Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:

Date Initiated: 03/11/2019

Docket/Case Number: 3-19035

Principal Product Type: Mutual Fund(s)

Other Product Type(s):

Allegations: IA RELEASE 40-5132 / MARCH 11, 2019: THE SECURITIES AND EXCHANGECOMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THATPUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BEINSTITUTED AGAINST COMMONWEALTH EQUITY SERVICES, LLC("RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'SOFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUTOF BREACHES OF FIDUCIARY DUTY AND INADEQUATE DISCLOSURES BYTHE RESPONDENT IN CONNECTION WITH ITS MUTUAL FUND SHARECLASS SELECTION PRACTICES AND THE FEES IT RECEIVED. AT TIMESDURING THE RELEVANT PERIOD, RESPONDENT PURCHASED,RECOMMENDED, OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARECLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARECLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE.RESPONDENT RECEIVED 12B-1 FEES IN CONNECTION WITH THESEINVESTMENTS. RESPONDENT FAILED TO DISCLOSE IN ITS FORM ADV OROTHERWISE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPTOF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARECLASSES THAT PAY SUCH FEES. DURING THE RELEVANT PERIOD,RESPONDENT RECEIVED 12B-1 FEES FOR ADVISING CLIENTS TO INVESTIN OR HOLD SUCH MUTUAL FUND SHARE CLASSES. AS A RESULT OF THECONDUCT, RESPONDENT WILLFULLY VIOLATED SECTIONS 206(2) AND 207OF THE ADVISERS ACT.

Resolution Date: 03/11/2019

Resolution:

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

Yes

Sanctions Ordered: CensureDisgorgement/RestitutionCease and Desist/Injunction

Order






Other Sanctions Ordered: UNDERTAKINGS AND PREJUDGMENT INTEREST

Sanction Details: THE RESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS206(2) AND 207 OF THE ADVISERS ACT. RESPONDENT IS CENSURED,SHALL PAY DISGORGEMENT OF $1,426,700.16 AND PREJUDGMENTINTEREST OF $210,603.29, AND SHALL COMPLY WITH THE UNDERTAKINGSENUMERATED IN THE OFFER OF SETTLEMENT.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. IN VIEW OF THE FOREGOING,THE COMMISSION DEEMS IT APPROPRIATE IN THE PUBLIC INTEREST TOIMPOSE THE SANCTIONS AGREED TO IN THE RESPONDENT'S OFFER.ACCORDINGLY, IT IS ORDERED THAT RESPONDENT SHALL CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT.RESPONDENT IS CENSURED, SHALL PAY DISGORGEMENT OF $1,426,700.16AND PREJUDGMENT INTEREST OF $210,603.29, AND SHALL COMPLY WITHTHE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT.

RESPONDENT SELF-REPORTED TO THE COMMISSION THE VIOLATIONSDISCUSSED IN THIS ORDER PURSUANT TO THE DIVISION OFENFORCEMENT'S SHARE CLASS SELECTION DISCLOSURE INITIATIVE("SCSD INITIATIVE"). ACCORDINGLY, THIS ORDER AND RESPONDENT'SOFFER ARE BASED ON THE INFORMATION SELF-REPORTED BYRESPONDENT.


iReporting Source: Firm

Allegations: DURING THE PERIOD JANUARY 1, 2014, TO MARCH 27, 2014,COMMONWEALTH PURCHASED, RECOMMENDED, OR HELD FOR ADVISORYCLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEESINSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FORWHICH THE CLIENTS WERE ELIGIBLE. COMMONWEALTH AND ITSASSOCIATED PERSONS RECEIVED 12B-1 FEES IN CONNECTION WITHTHESE INVESTMENTS. THE SECURITIES AND EXCHANGE COMMISSION("SEC") FOUND THAT COMMONWEALTH FAILED TO DISCLOSE IN ITS FORMADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO ITSRECEIPT OF 12B-1 FEES AND/OR ITS SELECTION OF MUTUAL FUND SHARECLASSES THAT PAY SUCH FEES. AS A RESULT OF THESE DISCLOSUREFAILURES, THE SEC FOUND THAT COMMONWEALTH VIOLATED SECTIONS206(2) AND 207 OF THE ADVISERS ACT.









Censure


CEASE AND DESIST





DURING THE PERIOD JANUARY 1, 2014, TO MARCH 27, 2014,COMMONWEALTH PURCHASED, RECOMMENDED, OR HELD FOR ADVISORYCLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEESINSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FORWHICH THE CLIENTS WERE ELIGIBLE. COMMONWEALTH AND ITSASSOCIATED PERSONS RECEIVED 12B-1 FEES IN CONNECTION WITHTHESE INVESTMENTS. THE SECURITIES AND EXCHANGE COMMISSION("SEC") FOUND THAT COMMONWEALTH FAILED TO DISCLOSE IN ITS FORMADV OR OTHERWISE THE CONFLICTS OF INTEREST RELATED TO ITSRECEIPT OF 12B-1 FEES AND/OR ITS SELECTION OF MUTUAL FUND SHARECLASSES THAT PAY SUCH FEES. AS A RESULT OF THESE DISCLOSUREFAILURES, THE SEC FOUND THAT COMMONWEALTH VIOLATED SECTIONS206(2) AND 207 OF THE ADVISERS ACT.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS AND PREJUDGMENT INTEREST

Sanction Details: WITHOUT ADMITTING OR DENYING GUILT COMMONWEALTH CONSENTEDTO A CEASE AND DESIST, CENSURE, AND DISGORGEMENT OF$1,426,700.16 AND PREJUDGMENT INTEREST OF $210,603.29.

Firm Statement PURSUANT TO THE DIVISION OF ENFORCEMENT'S SHARE CLASSSELECTION DISCLOSURE INITIATIVE, COMMONWEALTH SELF-REPORTEDTHESE VIOLATIONS TO THE SEC. ON MARCH 11, 2019, THE SEC ACCEPTEDCOMMONWEALTH'S OFFER OF SETTLEMENT AND ENTERED ANADMINISTRATIVE ORDER.


Order

Disclosure 2 of 23

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES,AND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS, BUT FAILEDTO MAINTAIN WSPS REASONABLY DESIGNED TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITYOF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS.THE FIRM FAILED TO ADOPT CONTROLS REASONABLY DESIGNED TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUALFUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLYAVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THATELIGIBLE CUSTOMERS WERE OVERCHARGED BY $766,295 FOR MUTUALFUND PURCHASES MADE SINCE JANUARY 1, 2011.







Initiated By: FINRA




Docket/Case Number: 2016049975901



WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES,AND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS, BUT FAILEDTO MAINTAIN WSPS REASONABLY DESIGNED TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITYOF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS.THE FIRM FAILED TO ADOPT CONTROLS REASONABLY DESIGNED TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUALFUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLYAVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THATELIGIBLE CUSTOMERS WERE OVERCHARGED BY $766,295 FOR MUTUALFUND PURCHASES MADE SINCE JANUARY 1, 2011.


Resolution:

Other Sanctions Ordered: INTEREST; REQUIRED TO PROVIDE REMEDIATION TO ELIGIBLECUSTOMERS WHO QUALIFIED FOR AND DID NOT RECEIVE THEAPPLICABLE MUTUAL FUND SALES-CHARGE WAIVER, AND HAS PROVIDEDFINRA WITH A DETAILED PLAN TO REMEDIATE ELIGIBLE CUSTOMERSBASED ON SPECIFIC CRITERIA THAT IS NOT UNACCEPTABLE TO FINRA.


No

Sanctions Ordered: CensureDisgorgement/Restitution

Acceptance, Waiver & Consent(AWC)





https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=2016049975901



Sanction Details: THE FIRM WAS CENSURED AND REQUIRED TO PROVIDE FINRA WITH AREMEDIATION PLAN. AS PART OF THIS SETTLEMENT, THE FIRM AGREES TOPAY RESTITUTION TO ELIGIBLE CUSTOMERS, WHICH IS ESTIMATED TOTOTAL $888,337 (THE AMOUNT ELIGIBLE CUSTOMERS WEREOVERCHARGED, INCLUSIVE OF INTEREST).

Regulator Statement FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THEFIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTIONBY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLECUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANTPERIOD; (2) VOLUNTARILY EXPANDED THE RELEVANT PERIOD OFAPPLICABLE TRANSACTIONS, RESULTING IN ADDITIONAL RESTITUTION TOADDITIONAL CUSTOMERS; (3) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVEAPPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKEN ACTIONAND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5)EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TODETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITSPROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES,AND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS, BUT FAILEDTO MAINTAIN WSPS REASONABLY DESIGNED TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITYOF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS.THE FIRM FAILED TO ADOPT CONTROLS REASONABLY DESIGNED TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUALFUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLYAVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THATELIGIBLE CUSTOMERS WERE OVERCHARGED BY $766,295 FOR MUTUALFUND PURCHASES MADE SINCE JULY 1, 2009.







Initiated By: FINRA


Censure






WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS THAT WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE ELIGIBLE CUSTOMERSWERE INSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALESCHARGE, OR CLASS B OR C SHARES WITH BACK-END SALES CHARGES,AND HIGHER ONGOING FEES AND EXPENSES. THESE SALESDISADVANTAGED ELIGIBLE CUSTOMERS BY CAUSING SUCH CUSTOMERSTO PAY HIGHER FEES THAN THEY WERE ACTUALLY REQUIRED TO PAY.THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO REASONABLYSUPERVISE THE APPLICATION OF SALES CHARGE WAIVERS TO ELIGIBLEMUTUAL FUND SALES. THE FIRM RELIED ON ITS FINANCIAL ADVISORS TODETERMINE THE APPLICABILITY OF SALES CHARGE WAIVERS, BUT FAILEDTO MAINTAIN WSPS REASONABLY DESIGNED TO ASSIST FINANCIALADVISORS IN MAKING THIS DETERMINATION. IN ADDITION, THE FIRMFAILED TO TRAIN ITS FINANCIAL ADVISORS REGARDING THE AVAILABILITYOF MUTUAL FUND SALES-CHARGE WAIVERS FOR ELIGIBLE CUSTOMERS.THE FIRM FAILED TO ADOPT CONTROLS REASONABLY DESIGNED TODETECT INSTANCES IN WHICH THEY DID NOT PROVIDE SALES-CHARGEWAIVERS TO ELIGIBLE CUSTOMERS IN CONNECTION WITH THEIR MUTUALFUND PURCHASES. AS A RESULT OF THE FIRM'S FAILURE TO APPLYAVAILABLE SALES CHARGE WAIVERS, THE FIRM ESTIMATES THATELIGIBLE CUSTOMERS WERE OVERCHARGED BY $766,295 FOR MUTUALFUND PURCHASES MADE SINCE JULY 1, 2009.


Resolution:


Sanction Details: IN FEBRUARY 2016 THE FIRM BEGAN TO MAKE RESTITUTION, WHICH ISESTIMATED TO TOTAL $888,337 (THE AMOUNT ELIGIBLE CUSTOMERSWERE OVERCHARGED, INCLUSIVE OF INTEREST). EACH ELIGIBLECUSTOMER HAS RECEIVED RESTITUTION, PLUS INTEREST.

Firm Statement FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THEFIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTIONBY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLECUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANTPERIOD; (2) VOLUNTARILY EXPANDED THE RELEVANT PERIOD OFAPPLICABLE TRANSACTIONS, RESULTING IN ADDITIONAL RESTITUTION TOADDITIONAL CUSTOMERS; (3) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVEAPPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKEN ACTIONAND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5)EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TODETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITSPROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.

Sanctions Ordered: CensureDisgorgement/Restitution








FINRA HAS RECOGNIZED THE EXTRAORDINARY COOPERATION OF THEFIRM FOR HAVING: (1) INITIATED, PRIOR TO DETECTION OR INTERVENTIONBY A REGULATOR, AN INVESTIGATION TO IDENTIFY WHETHER ELIGIBLECUSTOMERS RECEIVED SALES CHARGE WAIVERS DURING THE RELEVANTPERIOD; (2) VOLUNTARILY EXPANDED THE RELEVANT PERIOD OFAPPLICABLE TRANSACTIONS, RESULTING IN ADDITIONAL RESTITUTION TOADDITIONAL CUSTOMERS; (3) PROMPTLY ESTABLISHED A PLAN OFREMEDIATION FOR ELIGIBLE CUSTOMERS WHO DID NOT RECEIVEAPPROPRIATE SALES CHARGE WAIVERS; (4) PROMPTLY TAKEN ACTIONAND REMEDIAL STEPS TO CORRECT THE VIOLATIVE CONDUCT; AND (5)EMPLOYED SUBSEQUENT CORRECTIVE MEASURES, PRIOR TODETECTION OR INTERVENTION BY A REGULATOR, TO REVISE ITSPROCEDURES TO AVOID RECURRENCE OF THE MISCONDUCT.

Disclosure 3 of 23

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Initiated By: FINRA


Other


N/A



Principal Product Type: Unit Investment Trust(s)


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS)RESULTING IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OFAPPROXIMATELY $320,917. THE FINDINGS STATED THAT THE FIRM HASPAID RESTITUTION TO ALL AFFECTED CUSTOMERS. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ASUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE THAT CUSTOMERS RECEIVED SALESCHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES. THE FIRM RELIEDPRIMARILY ON ITS REGISTERED REPRESENTATIVES TO ENSURE THATCUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITROLLOVER AND EXCHANGE PURCHASES, DESPITE THE FACT THAT THEFIRM DID NOT EFFECTIVELY TRAIN REPRESENTATIVES AND THEIRSUPERVISORS TO IDENTIFY AND APPLY SUCH SALES CHARGEDISCOUNTS.



Resolution: Acceptance, Waiver & Consent(AWC)







Other Sanctions Ordered:

Sanction Details: THE FIRM WAS CENSURED, FINED $225,000, AND PAID RESTITUTION OF$357,521.04 TO CUSTOMERS.


No

Sanctions Ordered: CensureMonetary/Fine $225,000.00Disgorgement/Restitution


Initiated By: FINRA


Other



Principal Product Type: Unit Investment Trust(s)


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOIDENTIFY AND APPLY SALES CHARGE DISCOUNTS TO CERTAINCUSTOMERS' ELIGIBLE PURCHASES OF UNIT INVESTMENT TRUSTS (UITS)RESULTING IN CUSTOMERS PAYING EXCESSIVE SALES CHARGES OFAPPROXIMATELY $320,917. THE FINDINGS STATED THAT THE FIRM HASPAID RESTITUTION TO ALL AFFECTED CUSTOMERS. THE FINDINGS ALSOSTATED THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ASUPERVISORY SYSTEM AND WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ENSURE THAT CUSTOMERS RECEIVED SALESCHARGE DISCOUNTS ON ALL ELIGIBLE UIT PURCHASES. THE FIRM RELIEDPRIMARILY ON ITS REGISTERED REPRESENTATIVES TO ENSURE THATCUSTOMERS RECEIVED SALES CHARGE DISCOUNTS ON ALL ELIGIBLE UITROLLOVER AND EXCHANGE PURCHASES, DESPITE THE FACT THAT THEFIRM DID NOT EFFECTIVELY TRAIN REPRESENTATIVES AND THEIRSUPERVISORS TO IDENTIFY AND APPLY SUCH SALES CHARGEDISCOUNTS.









Other


N/A


Resolution:


Sanction Details: THE FIRM WAS CENSURED, FINED $225,000, AND PAID RESTITUTION OF$357,521.04 TO CUSTOMERS.

Firm Statement UPON DISCOVERING THIS ISSUE, COMMONWEALTH PROACTIVELYREVISED THE APPLICABLE SUPERVISORY SYSTEMS AND PROCEDURESFOR UIT ROLLOVER AND EXCHANGE PURCHASES AND REIMBURSED ALLAFFECTED CUSTOMERS FOR THE DISCOUNTS, PLUS INTEREST.



Disclosure 4 of 23

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT UPDATEDTHE SOFTWARE THAT DIRECTS THE FLOW OF ITS REGISTEREDREPRESENTATIVES' EMAILS TO THE FIRM'S EMAIL RETENTION SERVERBUT THE SOFTWARE UPGRADE WAS NOT COMPATIBLE WITH THECOMPUTERIZED TOOL (SURVEILLANCE TOOL) THAT THE FIRM USES TOCONDUCT DAILY REVIEWS OF ITS ASSOCIATED PERSONS' EMAILS. THEFINDINGS STATED THAT THE FIRM FAILED TO TEST ITS EMAILSUPERVISORY SYSTEM DURING ITS SOFTWARE UPDATE, ANDCONSEQUENTLY DID NOT IDENTIFY THAT THE SURVEILLANCE TOOL WASNOT SURVEILLING THE OUTGOING DOING BUSINESS AS (DBA) EMAILS OFREGISTERED REPRESENTATIVES IN THE FIRM'S BRANCH OFFICES ORFORWARDING A SAMPLING OF THOSE EMAILS FOR REVIEW BY THE FIRM'SCOMPLIANCE DEPARTMENT. DURING THE FIRST MONTH THAT ITEMPLOYED THE UPDATED SOFTWARE, THE FIRM FAILED TO PERFORM ADAILY SURVEILLANCE REVIEW OF THE OUTGOING EMAILS OF ONE-HALFOF THE DBA EMAIL DOMAINS MAINTAINED BY THE FIRM'S REGISTEREDREPRESENTATIVES. THREE MONTHS LATER, THE FIRM'S SUPERVISORYSYSTEM FAILED TO PERFORM A DAILY SURVEILLANCE REVIEW OF THEOUTGOING EMAILS FROM ANY OF THE DBA EMAIL DOMAINS OPERATED BYTHE FIRM'S REGISTERED REPRESENTATIVES. UNTIL THE FIRM FIXED ITSCOMPUTERIZED SUPERVISORY SYSTEM, THE FIRM'S REGISTEREDREPRESENTATIVES TRANSMITTED APPROXIMATELY 17 MILLION EMAILS,AND ABOUT 14 MILLION OF THOSE OUTGOING EMAILS WERE SENTTHROUGH REGISTERED REPRESENTATIVES' DBA EMAIL DOMAINS. THEFIRM FAILED TO SUBJECT APPROXIMATELY 12.6 MILLION OF THOSEOUTGOING EMAILS TO THE FIRM'S DAILY EMAIL SURVEILLANCEPROTOCOL. THE UNSURVEILLED EMAILS EQUALED ABOUT 90 PERCENTOF THE OUTGOING EMAILS TRANSMITTED BY THE FIRM'S REGISTEREDREPRESENTATIVES THROUGH THEIR DBA EMAIL DOMAINS. THE FINDINGSALSO STATED THAT ALTHOUGH THE FIRM'S INFORMATION TECHNOLOGY(IT) DEPARTMENT HAD ONGOING CONTACT WITH THE FIRM'S EMAILVENDOR CONCERNING THE REMEDIATION OF THE SURVEILLANCE TOOL,IT DID NOT TAKE STEPS TO ENSURE THAT ALL OF THE FIRM'S REGISTEREDREPRESENTATIVES' OUTGOING DBA EMAILS WERE SURVEILLED. THE ITDEPARTMENT ALSO FAILED TO NOTIFY THE FIRM'S LEGAL ANDCOMPLIANCE DEPARTMENTS ABOUT THE EMAIL SURVEILLANCE SYSTEM'SDEFICIENCIES UNTIL MORE THAN EIGHT MONTHS AFTER THE ITDEPARTMENT LEARNED OF THE PROBLEM WITH THE SURVEILLANCETOOL. THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS) AT THATTIME DID NOT REQUIRE THE IT DEPARTMENT TO NOTIFY THE LEGAL ANDCOMPLIANCE DEPARTMENTS WHEN IT DISCOVERED PROBLEMS WITH THEFIRM'S COMPUTERIZED SUPERVISORY SYSTEM. THE FINDINGS ALSOINCLUDED THAT WHILE REVIEWING ITS FAILURE TO SURVEIL ITSREGISTERED REPRESENTATIVES' OUTGOING DBA EMAILS, THE FIRMDISCOVERED THAT ITS SUPERVISORY SYSTEM ALSO FAILED TO SURVEILEMAILS (BOTH INCOMING AND OUTGOING) OF SOME REPRESENTATIVES.THE FIRM'S SUPERVISORY SYSTEM MAINTAINED A COMPUTERIZED "DIRECTORY" OF PERSONNEL, BUT WAS NOT ABLE TO IDENTIFY SOMEREGISTERED REPRESENTATIVES WHO HAD MULTIPLE LISTINGS IN THEDIRECTORY. BECAUSE OF THIS SECOND BREAK-DOWN IN ITSSUPERVISORY SYSTEM, THE FIRM FAILED TO REVIEW APPROXIMATELY474,380 OF ITS REGISTERED REPRESENTATIVES' EMAILS. THE FIRMFAILED TO ESTABLISH AND MAINTAIN SYSTEMS AND PROCEDURES THATWERE REASONABLY DESIGNED TO COMPLY WITH ITS OBLIGATION TOREVIEW EMAIL. FINRA ACKNOWLEDGES THAT THE FIRM SELF-REPORTEDTHE ISSUES DESCRIBED HEREIN, UNDERTOOK AN INTERNAL REVIEW OFITS SUPERVISORY POLICIES, PROCEDURES, AND SYSTEMS RELATING TOTHESE ISSUES, AND SUBJECTED EMAILS THAT HAD NOT BEEN REVIEWEDTO REVIEW. THE SANCTIONS REFLECT THE CREDIT THAT THE FIRM HASBEEN GIVEN FOR SELF-REPORTING THESE ISSUES AND PROVIDING THEINFORMATION OBTAINED AS A RESULT OF ITS INTERNAL REVIEW TOFINRA.







Initiated By: FINRA

WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT UPDATEDTHE SOFTWARE THAT DIRECTS THE FLOW OF ITS REGISTEREDREPRESENTATIVES' EMAILS TO THE FIRM'S EMAIL RETENTION SERVERBUT THE SOFTWARE UPGRADE WAS NOT COMPATIBLE WITH THECOMPUTERIZED TOOL (SURVEILLANCE TOOL) THAT THE FIRM USES TOCONDUCT DAILY REVIEWS OF ITS ASSOCIATED PERSONS' EMAILS. THEFINDINGS STATED THAT THE FIRM FAILED TO TEST ITS EMAILSUPERVISORY SYSTEM DURING ITS SOFTWARE UPDATE, ANDCONSEQUENTLY DID NOT IDENTIFY THAT THE SURVEILLANCE TOOL WASNOT SURVEILLING THE OUTGOING DOING BUSINESS AS (DBA) EMAILS OFREGISTERED REPRESENTATIVES IN THE FIRM'S BRANCH OFFICES ORFORWARDING A SAMPLING OF THOSE EMAILS FOR REVIEW BY THE FIRM'SCOMPLIANCE DEPARTMENT. DURING THE FIRST MONTH THAT ITEMPLOYED THE UPDATED SOFTWARE, THE FIRM FAILED TO PERFORM ADAILY SURVEILLANCE REVIEW OF THE OUTGOING EMAILS OF ONE-HALFOF THE DBA EMAIL DOMAINS MAINTAINED BY THE FIRM'S REGISTEREDREPRESENTATIVES. THREE MONTHS LATER, THE FIRM'S SUPERVISORYSYSTEM FAILED TO PERFORM A DAILY SURVEILLANCE REVIEW OF THEOUTGOING EMAILS FROM ANY OF THE DBA EMAIL DOMAINS OPERATED BYTHE FIRM'S REGISTERED REPRESENTATIVES. UNTIL THE FIRM FIXED ITSCOMPUTERIZED SUPERVISORY SYSTEM, THE FIRM'S REGISTEREDREPRESENTATIVES TRANSMITTED APPROXIMATELY 17 MILLION EMAILS,AND ABOUT 14 MILLION OF THOSE OUTGOING EMAILS WERE SENTTHROUGH REGISTERED REPRESENTATIVES' DBA EMAIL DOMAINS. THEFIRM FAILED TO SUBJECT APPROXIMATELY 12.6 MILLION OF THOSEOUTGOING EMAILS TO THE FIRM'S DAILY EMAIL SURVEILLANCEPROTOCOL. THE UNSURVEILLED EMAILS EQUALED ABOUT 90 PERCENTOF THE OUTGOING EMAILS TRANSMITTED BY THE FIRM'S REGISTEREDREPRESENTATIVES THROUGH THEIR DBA EMAIL DOMAINS. THE FINDINGSALSO STATED THAT ALTHOUGH THE FIRM'S INFORMATION TECHNOLOGY(IT) DEPARTMENT HAD ONGOING CONTACT WITH THE FIRM'S EMAILVENDOR CONCERNING THE REMEDIATION OF THE SURVEILLANCE TOOL,IT DID NOT TAKE STEPS TO ENSURE THAT ALL OF THE FIRM'S REGISTEREDREPRESENTATIVES' OUTGOING DBA EMAILS WERE SURVEILLED. THE ITDEPARTMENT ALSO FAILED TO NOTIFY THE FIRM'S LEGAL ANDCOMPLIANCE DEPARTMENTS ABOUT THE EMAIL SURVEILLANCE SYSTEM'SDEFICIENCIES UNTIL MORE THAN EIGHT MONTHS AFTER THE ITDEPARTMENT LEARNED OF THE PROBLEM WITH THE SURVEILLANCETOOL. THE FIRM'S WRITTEN SUPERVISORY PROCEDURES (WSPS) AT THATTIME DID NOT REQUIRE THE IT DEPARTMENT TO NOTIFY THE LEGAL ANDCOMPLIANCE DEPARTMENTS WHEN IT DISCOVERED PROBLEMS WITH THEFIRM'S COMPUTERIZED SUPERVISORY SYSTEM. THE FINDINGS ALSOINCLUDED THAT WHILE REVIEWING ITS FAILURE TO SURVEIL ITSREGISTERED REPRESENTATIVES' OUTGOING DBA EMAILS, THE FIRMDISCOVERED THAT ITS SUPERVISORY SYSTEM ALSO FAILED TO SURVEILEMAILS (BOTH INCOMING AND OUTGOING) OF SOME REPRESENTATIVES.THE FIRM'S SUPERVISORY SYSTEM MAINTAINED A COMPUTERIZED "DIRECTORY" OF PERSONNEL, BUT WAS NOT ABLE TO IDENTIFY SOMEREGISTERED REPRESENTATIVES WHO HAD MULTIPLE LISTINGS IN THEDIRECTORY. BECAUSE OF THIS SECOND BREAK-DOWN IN ITSSUPERVISORY SYSTEM, THE FIRM FAILED TO REVIEW APPROXIMATELY474,380 OF ITS REGISTERED REPRESENTATIVES' EMAILS. THE FIRMFAILED TO ESTABLISH AND MAINTAIN SYSTEMS AND PROCEDURES THATWERE REASONABLY DESIGNED TO COMPLY WITH ITS OBLIGATION TOREVIEW EMAIL. FINRA ACKNOWLEDGES THAT THE FIRM SELF-REPORTEDTHE ISSUES DESCRIBED HEREIN, UNDERTOOK AN INTERNAL REVIEW OFITS SUPERVISORY POLICIES, PROCEDURES, AND SYSTEMS RELATING TOTHESE ISSUES, AND SUBJECTED EMAILS THAT HAD NOT BEEN REVIEWEDTO REVIEW. THE SANCTIONS REFLECT THE CREDIT THAT THE FIRM HASBEEN GIVEN FOR SELF-REPORTING THESE ISSUES AND PROVIDING THEINFORMATION OBTAINED AS A RESULT OF ITS INTERNAL REVIEW TOFINRA.










Principal Product Type: No Product



Resolution:


Sanction Details: SEE ABOVE


No

Sanctions Ordered: CensureMonetary/Fine $250,000.00



Initiated By: FINANCIAL INDUSTRY REGULATORY AGENCY


Other


CENSURE AND MONETARY FINE


Docket/Case Number: AWC NO. 2012032025201



Allegations: FINRA ALLEGED THAT COMMONWEALTH VIOLATED NASD CONDUCT RULES3010 AND FINRA RULE 2010.









CENSURE AND MONETARY FINE


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A CENSURE AND $250,000 FINE.

Firm Statement DURING THE PERIOD FROM DECEMBER 7, 2009 TO JANUARY 28, 2012,COMMONWEALTH USED A SYSTEM TO COMPLY WITH ITS REGULATORYOBLIGATIONS PERTAINING TO ARCHIVING, PRESERVING ANDSUPERVISING THE BUSINESS-RELATED EMAILS OF ITS ASSOCIATEDPERSONS. DURING THIS PERIOD COMMONWEALTH'S EMAILSURVEILLANCE SYSTEM FAILED TO SUBJECT ABOUT 12.6 MILLION OF ITSASSOCIATED PERSONS' OUTGOING EMAILS TO ITS DAILY EMAILSURVEILLANCE PROTOCOL, AND FAILED TO SURVEIL APPROXIMATELY474,380 EMAILS THAT WERE SENT OR RECEIVED BY ITS REGISTEREDREPRESENTATIVES. THESE FAILURES VIOLATED NASD CONDUCT RULES3010(A) AND 3010(D)(2) AND FINRA RULE 2010. DESPITE THE FAILURE OFITS SURVEILLANCE TOOL TO REVIEW OUTGOING EMAILS,COMMONWEALTH DID SURVEIL INCOMING EMAILS THAT WERE RECEIVEDBY ITS REGISTERED REPRESENTATIVES, INCLUDING EMAILS SENT INREPLY TO ITS REPRESENTATIVES' OUTGOING EMAILS; OUTGOING EMAILSTHAT WERE SENT TO OR CARBON-COPIED TO COMMONWEALTHEMPLOYEES OR OTHER COMMONWEALTH REGISTEREDREPRESENTATIVES; AND CERTAIN OUTGOING EMAILS IN CONNECTIONWITH THE FIRM'S BRANCH AUDITS. COMMONWEALTH SELF-REPORTEDTHESE ISSUES TO FINRA IN MARCH 2012, UNDERTOOK AN INTERNALREVIEW OF ITS SUPERVISORY POLICIES, PROCEDURES, AND SYSTEMSRELATING TO THESE ISSUES, AND SUBJECTED EMAILS THAT HAD NOTBEEN REVIEWED TO REVIEW. WITHOUT ADMITTING OR DENYING THEFINDINGS, COMMONWEALTH ACCEPTED AND CONSENTED TO A CENSUREAND A $250,000 FINE.



Disclosure 5 of 23

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Allegations: COMMONWEALTH, THROUGH ITS REGISTERED REPRESENTATIVES, SOLDNON-TRADED REITS IN EXCESS OF MASSACHUSETTS HEIGHTENED 10%CONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.







Initiated By: MASSACHUSETTS SECURITIES DIVISION


Civil and Administrative Penalt(ies) /Fine(s)



Docket/Case Number: E-2013-0046

URL for Regulatory Action:

Principal Product Type: Other


Allegations: COMMONWEALTH, THROUGH ITS REGISTERED REPRESENTATIVES, SOLDNON-TRADED REITS IN EXCESS OF MASSACHUSETTS HEIGHTENED 10%CONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.


Resolution:

Other Sanctions Ordered: COMMONWEALTH SHALL CERTIFY IN WRITING TO THE DIVISION A REPORTADDRESSING A COMPREHENSIVE REVIEW OF COMMONWEALTH'SPOLICIES AND PROCEDURES FOR THE SALE AND APPROVAL OF ALLALTERNATIVE INVESTMENTS.

Sanction Details: COMMONWEALTH MUST OFFER RESTITUTION TO CUSTOMERS THATWERE SOLD NON-TRADED REITS IN EXCESS OF MASSACHUSETTSMAXIMUM CONCENTRATION LIMITS IMPOSED BY THE PROSPECTUS.


No

Sanctions Ordered: CensureMonetary/Fine $300,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order


Allegations: COMMONWEALTH DID NOT MEET SPECIFIC MASSACHUSETTSPROSPECTUS CONCENTRATION REQUIREMENTS FOR NON-TRADED REALESTATE INVESTMENT TRUSTS. IN ADDITION, DID NOT MEET SUPERVISORYREQUIREMENTS SPECIFIC TO THE SALE OF CERTAIN NON-TRADED REALESTATE INVESTMENT TRUST TRANSACTIONS RELATED TO THEPROSPECTUS 10% CONCENTRATION LIMITS.












Docket/Case Number: E-2013-0046


Other Product Type(s): NON-TRADED REAL ESTATE INVESTMENT TRUST

COMMONWEALTH DID NOT MEET SPECIFIC MASSACHUSETTSPROSPECTUS CONCENTRATION REQUIREMENTS FOR NON-TRADED REALESTATE INVESTMENT TRUSTS. IN ADDITION, DID NOT MEET SUPERVISORYREQUIREMENTS SPECIFIC TO THE SALE OF CERTAIN NON-TRADED REALESTATE INVESTMENT TRUST TRANSACTIONS RELATED TO THEPROSPECTUS 10% CONCENTRATION LIMITS.


Resolution:

Other Sanctions Ordered: COMMONWEALTH HAS CERTIFIED IN WRITING TO THE DIVISION A REPORTADDRESSING A COMPREHENSIVE REVIEW OF COMMONWEALTH'SPOLICIES AND PROCEDURES FOR THE SALE AND APPROVAL OF ALLALTERNATIVE INVESTMENTS.

Sanction Details: $300,000.00 FINE AND RESTITUTION TO MASSACHUSETTS INVESTORS INACCORDANCE WITH CONSENT ORDER CRITERIA

Firm Statement IN EXAMINING 1,499 REAL ESTATE INVESTMENT TRUST TRANSACTIONSOVER A SIX-YEAR TIME PERIOD, MASSACHUSETTS IDENTIFIED A TOTAL OF42 THAT WERE IN EXCESS OF MASSACHUSETTS' CONCENTRATION LIMITSTHAT WERE IN THE PROSPECTUS.

Sanctions Ordered: CensureMonetary/Fine $300,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order

Disclosure 6 of 23

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Allegations: NASD RULES 2110, 3010, 6230(A) - COMMONWEALTH EQUITY SERVICES,LLP FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCEENGINE (TRACE) TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN15 MINUTES OF TIME OF EXECUTION. THIS CONDUCT CONSTITUTESSEPARATE AND DISTINCT VIOLATIONS OF NASD RULE 6230(A) AND APATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONALCIRCUMSTANCES IN VIOLATION OF NASD RULE 2110. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND FINRA RULES CONCERNING TRACERULES.







Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE SECURITIES

NASD RULES 2110, 3010, 6230(A) - COMMONWEALTH EQUITY SERVICES,LLP FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCEENGINE (TRACE) TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN15 MINUTES OF TIME OF EXECUTION. THIS CONDUCT CONSTITUTESSEPARATE AND DISTINCT VIOLATIONS OF NASD RULE 6230(A) AND APATTERN OR PRACTICE OF LATE REPORTING WITHOUT EXCEPTIONALCIRCUMSTANCES IN VIOLATION OF NASD RULE 2110. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS AND FINRA RULES CONCERNING TRACERULES.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $15,000 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDING TRACERULES WITHIN 30 DAYS OF ACCEPTANCE OF THIS AWC BY THE NAC.


No




Allegations: FINRA ALLEGED, DURING THE TIME PERIOD FROM APRIL 1 TO JUNE 30,2008, THAT COMMONWEALTH EQUITY SERVICES, LLP ("COMMONWEALTH")FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) 234 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15MINUTES OF TIME OF EXECUTION AND THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND FINRA RULES CONCERNING TRACE RULES.








Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY


Other


CENSURE, MONETARY FINE, AND UNDERTAKING


Docket/Case Number: AWC NO. 2008014569301


Other Product Type(s): TRACE-ELIGIBLE SECURITIES

Allegations: FINRA ALLEGED, DURING THE TIME PERIOD FROM APRIL 1 TO JUNE 30,2008, THAT COMMONWEALTH EQUITY SERVICES, LLP ("COMMONWEALTH")FAILED TO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) 234 TRANSACTIONS IN TRACE-ELIGIBLE SECURITIES WITHIN 15MINUTES OF TIME OF EXECUTION AND THAT THE FIRM'S SUPERVISORYSYSTEM DID NOT PROVIDE FOR SUPERVISION REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS,REGULATIONS AND FINRA RULES CONCERNING TRACE RULES.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO A CENSURE, A $15,000 FINE AND AN UNDERTAKING TO REVISE THEFIRM'S WRITTEN SUPERVISORY PROCEDURES REGARDING TRACE RULESWITHIN 30 DAYS OF ACCEPTANCE OF THIS LETTER OF ACCEPTANCE,WAIVER AND CONSENT BY FINRA'S NATIONAL ADJUDICATORY COUNCIL("NAC") REVIEW COMMITTEE.

Firm Statement ON NOVEMBER 24, 2009, FINRA'S NAC REVIEW COMMITTEE ACCEPTEDCOMMONWEALTH'S LETTER OF ACCEPTANCE, WAIVER AND CONSENT.WITHOUT ADMITTING OR DENYING THE FINDINGS, COMMONWEALTHCONSENTED TO A CENSURE, A $15,000 FINE AND AN UNDERTAKING TOREVISE THE FIRM'S WRITTEN SUPERVISORY PROCEDURES REGARDINGTRACE RULES.



Disclosure 7 of 23

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Allegations: SEC ADMINISTRATIVE RELEASE 34-60733, IA 40-2929, SEPTEMBER 29, 2009:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), AND SECTIONS203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940("ADVISERS ACT") AGAINST COMMONWEALTH EQUITY SERVICES, LLPD/B/A COMMONWEALTH FINANCIAL NETWORK ("COMMONWEALTH" OR "RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'SOFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUTOF THE WILLFUL VIOLATIONS BY COMMONWEALTH, A REGISTEREDBROKER-DEALER AND INVESTMENT ADVISER, OF RULE 30(A) OFREGULATION S-P (17 C.F.R. § 248.30(A)), WHICH REQUIRES BROKER-DEALERS AND COMMISSION-REGISTERED INVESTMENT ADVISERS TOADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNEDTO PROTECT CUSTOMER INFORMATION. AT ALL RELEVANT TIMES,COMMONWEALTH RECOMMENDED - BUT DID NOT REQUIRE - THAT ITSREGISTERED REPRESENTATIVES MAINTAIN ANTIVIRUS SOFTWARE ONTHEIR COMPUTERS, WHICH THE REGISTERED REPRESENTATIVES USEDTO ACCESS CUSTOMER ACCOUNT INFORMATION ON THE FIRM'SINTRANET AND TRADING PLATFORM. AS A RESULT, COMMONWEALTH'SCUSTOMER INFORMATION WAS LEFT VULNERABLE TO UNAUTHORIZEDACCESS. IN ADDITION, COMMONWEALTH DID NOT HAVE PROCEDURES INPLACE TO ADEQUATELY REVIEW ITS REGISTERED REPRESENTATIVES'COMPUTER SECURITY MEASURES. IN PARTICULAR, COMMONWEALTH'SINTERNAL AUDITORS DID NOT AUDIT BRANCH OFFICE COMPUTERS TODETERMINE WHETHER ANTIVIRUS SOFTWARE WAS INSTALLED, NOR DIDCOMMONWEALTH HAVE PROCEDURES IN PLACE TO FOLLOW UP ONPOTENTIAL COMPUTER SECURITY ISSUES UNCOVERED DURING BRANCHAUDITS OR WHEN REGISTERED REPRESENTATIVES CONTACTEDCOMMONWEALTH'S INFORMATION TECHNOLOGY HELP DESK FORCOMPUTER-RELATED ASSISTANCE. IN NOVEMBER 2008, ANUNAUTHORIZED PARTY ("INTRUDER") OBTAINED THE LOGIN CREDENTIALSOF A COMMONWEALTH REGISTERED REPRESENTATIVE THROUGH THEUSE OF A COMPUTER VIRUS AND WAS THEREBY ABLE TO ACCESSCOMMONWEALTH'S INTRANET. THIS PARTY ACCESSED A LIST OF 368 OFTHE REPRESENTATIVE'S COMMONWEALTH CUSTOMER ACCOUNTS ANDENTERED UNAUTHORIZED PURCHASE ORDERS IN EIGHT OF THOSEACCOUNTS BEFORE THE ACTIVITY WAS DETECTED BY COMMONWEALTH'SCLEARING BROKER-DEALER AND THE UNAUTHORIZED PARTY WASBLOCKED FROM FURTHER TRADING. ALTHOUGH COMMONWEALTHABSORBED THE MONETARY LOSSES, ITS FAILURES ALLOWED THIS PARTYTO HAVE ACCESS TO CERTAIN CUSTOMER INFORMATION RELATING TO368 OF THE REPRESENTATIVE'S CUSTOMER ACCOUNTS.














SEC ADMINISTRATIVE RELEASE 34-60733, IA 40-2929, SEPTEMBER 29, 2009:THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS ITAPPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLICADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, ANDHEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 15(B) AND 21C OF THESECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT"), AND SECTIONS203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940("ADVISERS ACT") AGAINST COMMONWEALTH EQUITY SERVICES, LLPD/B/A COMMONWEALTH FINANCIAL NETWORK ("COMMONWEALTH" OR "RESPONDENT"). ON THE BASIS OF THIS ORDER AND RESPONDENT'SOFFER, THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE OUTOF THE WILLFUL VIOLATIONS BY COMMONWEALTH, A REGISTEREDBROKER-DEALER AND INVESTMENT ADVISER, OF RULE 30(A) OFREGULATION S-P (17 C.F.R. § 248.30(A)), WHICH REQUIRES BROKER-DEALERS AND COMMISSION-REGISTERED INVESTMENT ADVISERS TOADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNEDTO PROTECT CUSTOMER INFORMATION. AT ALL RELEVANT TIMES,COMMONWEALTH RECOMMENDED - BUT DID NOT REQUIRE - THAT ITSREGISTERED REPRESENTATIVES MAINTAIN ANTIVIRUS SOFTWARE ONTHEIR COMPUTERS, WHICH THE REGISTERED REPRESENTATIVES USEDTO ACCESS CUSTOMER ACCOUNT INFORMATION ON THE FIRM'SINTRANET AND TRADING PLATFORM. AS A RESULT, COMMONWEALTH'SCUSTOMER INFORMATION WAS LEFT VULNERABLE TO UNAUTHORIZEDACCESS. IN ADDITION, COMMONWEALTH DID NOT HAVE PROCEDURES INPLACE TO ADEQUATELY REVIEW ITS REGISTERED REPRESENTATIVES'COMPUTER SECURITY MEASURES. IN PARTICULAR, COMMONWEALTH'SINTERNAL AUDITORS DID NOT AUDIT BRANCH OFFICE COMPUTERS TODETERMINE WHETHER ANTIVIRUS SOFTWARE WAS INSTALLED, NOR DIDCOMMONWEALTH HAVE PROCEDURES IN PLACE TO FOLLOW UP ONPOTENTIAL COMPUTER SECURITY ISSUES UNCOVERED DURING BRANCHAUDITS OR WHEN REGISTERED REPRESENTATIVES CONTACTEDCOMMONWEALTH'S INFORMATION TECHNOLOGY HELP DESK FORCOMPUTER-RELATED ASSISTANCE. IN NOVEMBER 2008, ANUNAUTHORIZED PARTY ("INTRUDER") OBTAINED THE LOGIN CREDENTIALSOF A COMMONWEALTH REGISTERED REPRESENTATIVE THROUGH THEUSE OF A COMPUTER VIRUS AND WAS THEREBY ABLE TO ACCESSCOMMONWEALTH'S INTRANET. THIS PARTY ACCESSED A LIST OF 368 OFTHE REPRESENTATIVE'S COMMONWEALTH CUSTOMER ACCOUNTS ANDENTERED UNAUTHORIZED PURCHASE ORDERS IN EIGHT OF THOSEACCOUNTS BEFORE THE ACTIVITY WAS DETECTED BY COMMONWEALTH'SCLEARING BROKER-DEALER AND THE UNAUTHORIZED PARTY WASBLOCKED FROM FURTHER TRADING. ALTHOUGH COMMONWEALTHABSORBED THE MONETARY LOSSES, ITS FAILURES ALLOWED THIS PARTYTO HAVE ACCESS TO CERTAIN CUSTOMER INFORMATION RELATING TO368 OF THE REPRESENTATIVE'S CUSTOMER ACCOUNTS.


Resolution:


Sanction Details: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSEOF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BYOR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION ISA PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN,EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THESUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934,AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND ACEASE-AND-DESIST ORDER. ACCORDINGLY, PURSUANT TO SECTIONS15(B) AND 21C OF THE EXCHANGE ACT AND SECTIONS 203(E) AND 203(K)OF THE ADVISERS ACT, IT IS HEREBY ORDERED THAT COMMONWEALTHCEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONSAND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P (17C.F.R. § 248.30(A)); COMMONWEALTH IS CENSURED; COMMONWEALTHSHALL, WITHIN TEN (10) DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVILMONEY PENALTY IN THE AMOUNT OF $100,000 TO THE UNITED STATESTREASURY. IF TIMELY PAYMENT IS NOT MADE, ADDITIONAL INTERESTSHALL ACCRUE PURSUANT TO SEC RULE OF PRACTICE 600.


No

Sanctions Ordered: CensureMonetary/Fine $100,000.00Cease and Desist/Injunction

Order






RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THECOMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSEOF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BYOR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION ISA PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN,EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THESUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED,RESPONDENT CONSENTS TO THE ENTRY OF THIS ORDER INSTITUTINGADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934,AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND ACEASE-AND-DESIST ORDER. ACCORDINGLY, PURSUANT TO SECTIONS15(B) AND 21C OF THE EXCHANGE ACT AND SECTIONS 203(E) AND 203(K)OF THE ADVISERS ACT, IT IS HEREBY ORDERED THAT COMMONWEALTHCEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONSAND ANY FUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P (17C.F.R. § 248.30(A)); COMMONWEALTH IS CENSURED; COMMONWEALTHSHALL, WITHIN TEN (10) DAYS OF THE ENTRY OF THIS ORDER, PAY A CIVILMONEY PENALTY IN THE AMOUNT OF $100,000 TO THE UNITED STATESTREASURY. IF TIMELY PAYMENT IS NOT MADE, ADDITIONAL INTERESTSHALL ACCRUE PURSUANT TO SEC RULE OF PRACTICE 600.




Cease and Desist


CENSURE AND A CIVIL MONEY PENALTY





Allegations: IN NOVEMBER 2008, AN INTRUDER OBTAINED THE LOGIN CREDENTIALSOF ONE COMMONWEALTH REPRESENTATIVE THROUGH THE USE OF ACOMPUTER VIRUS AND WAS THEREBY ABLE TO ACCESS A LIST OF THEREPRESENTATIVE'S COMMONWEALTH CUSTOMER ACCOUNTS. THEINTRUDER THEN ENTERED UNAUTHORIZED PURCHASE ORDERS FOR THESTOCK OF ONE PUBLICLY-TRADED COMPANY IN EIGHT ACCOUNTS.WITHIN TEN MINUTES OF PLACING THE TRADES THE ACTIVITY WASDETECTED BY COMMONWEALTH'S CLEARING BROKER-DEALER AND THEINTRUDER WAS BLOCKED FROM FURTHER TRADING. COMMONWEALTHIMMEDIATELY CANCELLED THE TRADES, ABSORBED THE MONETARYLOSSES, CONTACTED THE SEC AND PUT CORRECTIVE SAFEGUARDS INPLACE, INCLUDING MANDATING THE USE OF UP-TO-DATE ANTIVIRUSSOFTWARE BY ALL ITS REPRESENTATIVES. COMMONWEALTH, WITHOUTADMITTING OR DENYING THE ALLEGATIONS, CONSENTED TO AN SECADMINISTRATIVE ORDER FINDING IT FAILED TO COMPLY WITH RULE 30(A)OF REGULATION S-P.



Resolution: Order








Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE SECADMINISTRATIVE ORDER, COMMONWEALTH CONSENTED TO THEDESCRIBED SANCTIONS, WHEREIN IT WAS ORDERED TO CEASE ANDDESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF RULE 30(A) OF REGULATIONS S-P, CENSUREDAND PAY A CIVIL MONEY PENALTY OF $100,000.

Firm Statement ON SEPTEMBER 29, 2009, THE SEC ACCEPTED COMMONWEALTH'S OFFEROF SETTLEMENT AND ENTERED AN ADMINISTRATIVE ORDER. WITHOUTADMITTING OR DENYING THE FINDINGS, COMMONWEALTH CONSENTEDTO A CEASE AND DESIST, A CENSURE AND A CIVIL MONEY PENALTY OF$100,000 FOR VIOLATING RULE 30(A) OF REGULATION S-P.

Sanctions Ordered: CensureMonetary/Fine $100,000.00Cease and Desist/Injunction

Disclosure 8 of 23

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Docket/Case Number: FILE NO. 3-12749

Allegations: SEC ADMINISTRATIVE PROCEEDING RELEASE NO. 34-56362, SEPTEMBER6, 2007: COMMONWEALTH EQUITY SERVICES, LLP D/B/A COMMONWEALTHFINANCIAL NETWORK ("COMMONWEALTH" OR "RESPONDENT") FAILEDREASONABLY TO SUPERVISE A REGISTERED REPRESENTATIVE ("RR")WITH A VIEW TO PREVENTING AND DETECTING HIS VIOLATIONS OF THEFEDERAL SECURITIES LAWS DURING THE TEN-YEAR PERIOD THAT THE RRWAS A COMMONWEALTH REGISTERED REPRESENTATIVE FROM JANUARY1991 TO OCTOBER 2001. DURING AT LEAST THIS TIME PERIOD, THE RRDEFRAUDED APPROXIMATELY 34 OF RESPONDENT'S CUSTOMERS BYLYING ABOUT PURCHASES AND SALES OF SECURITIES,MISAPPROPRIATING FUNDS, AND SENDING THEM FALSIFIED STATEMENTSRELATING TO THEIR INVESTMENT ADVISORY ACCOUNTS WITH THE RR'SINDEPENDENT ADVISORY FIRM.BECAUSE THE RR VIOLATED SECTION10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER, ANDCOMMONWEALTH FAILED TO ESTABLISH PROCEDURES AND SYSTEMSTHAT WOULD REASONABLY BE EXPECTED TO PREVENT AND DETECTSUCH VIOLATIONS, COMMONWEALTH FAILED REASONABLY TO SUPERVISETHE RR FOR PURPOSES OF SECTION 15(B)(4)(E) OF THE EXCHANGE ACT.













Resolution:


Sanction Details: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WITHOUTADMITTING OR DENYING THE FINDINGS, RESPONDENT CONSENTS TO THEENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS,MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS. IN VIEW OF THEFOREGOING, THE COMMISSION DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO INRESPONDENT COMMONWEALTH'S OFFER. ACCORDINGLY, PURSUANT TOSECTION 15(B) OF THE EXCHANGE ACT, IT IS ORDERED THAT:RESPONDENT COMMONWEALTH BE, AND HEREBY IS, CENSUREDPURSUANT TO SECTION 15(B)(4) OF THE EXCHANGE ACT AND SHALL,WITHIN TEN DAYS OF THE ENTRY OF THIS ORDER, PAY DISGORGEMENTOF $1 AND A CIVIL MONEY PENALTY IN THE AMOUNT OF $250,000.(SANCTION DETAIL CONTINUED IN THE COMMENTS SECTION)

Regulator Statement (SANCTION DETAIL CONTINUED) IT IS FURTHER ORDERED THAT,PURSUANT TO SECTION 308(A) OF THE SARBANES-OXLEY ACT OF 2002, AFAIR FUND IS CREATED FOR THE DISGORGEMENT, INTEREST ANDPENALTIES. THERE MAY BE ADDITIONAL FUNDS FROM OTHER ACTIONSAGAINST THIRD PARTIES ARISING FROM THE RR'S UNDERLYING CONDUCTAND VIOLATIONS ADDRESSED HEREIN THAT WILL BE ADDED TO THE FAIRFUND AND DISTRIBUTED TO INJURED INVESTORS. REGARDLESS OFWHETHER ANY SUCH FAIR FUND DISTRIBUTION IS MADE, AMOUNTSORDERED TO BE PAID AS CIVIL MONEY PENALTIES PURSUANT TO THISORDER SHALL BE TREATED AS PENALTIES PAID TO THE GOVERNMENTFOR ALL PURPOSES, INCLUDING ALL TAX PURPOSES. TO PRESERVE THEDETERRENT EFFECT OF THE CIVIL PENALTY, RESPONDENT AGREES THATIT SHALL NOT, AFTER OFFSET OR REDUCTION IN ANY RELATED INVESTORACTION BASED ON RESPONDENT'S PAYMENT OF DISGORGEMENT IN THISACTION, ARGUE THAT IT IS ENTITLED TO, NOR SHALL IT FURTHER BENEFITBY OFFSET OR REDUCTION OF ANY PART OF RESPONDENT'S PAYMENT OFA CIVIL PENALTY IN THIS ACTION ("PENALTY OFFSET"). IF THE COURT INANY RELATED INVESTOR ACTION GRANTS SUCH A PENALTY OFFSET,RESPONDENT AGREES THAT IT SHALL, WITHIN 30 DAYS AFTER ENTRY OFA FINAL ORDER GRANTING THE PENALTY OFFSET, NOTIFY THECOMMISSION'S COUNSEL IN THIS ACTION AND PAY THE AMOUNT OF THEPENALTY OFFSET TO THE UNITED STATES TREASURY OR TO A FAIR FUND,AS THE COMMISSION DIRECTS. SUCH A PAYMENT SHALL NOT BE DEEMEDAN ADDITIONAL CIVIL PENALTY AND SHALL NOT BE DEEMED TO CHANGETHE AMOUNT OF THE CIVIL PENALTY IMPOSED IN THIS PROCEEDING.("RELATED INVESTOR ACTION" MEANS A PRIVATE DAMAGES ACTIONBROUGHT AGAINST RESPONDENT BY OR ON BEHALF OF ONE OR MOREINVESTORS BASED ON SUBSTANTIALLY THE SAME FACTS AS ALLEGED INTHE ORDER INSTITUTED BY THE COMMISSION IN THIS PROCEEDING.)


No


Order






(SANCTION DETAIL CONTINUED) IT IS FURTHER ORDERED THAT,PURSUANT TO SECTION 308(A) OF THE SARBANES-OXLEY ACT OF 2002, AFAIR FUND IS CREATED FOR THE DISGORGEMENT, INTEREST ANDPENALTIES. THERE MAY BE ADDITIONAL FUNDS FROM OTHER ACTIONSAGAINST THIRD PARTIES ARISING FROM THE RR'S UNDERLYING CONDUCTAND VIOLATIONS ADDRESSED HEREIN THAT WILL BE ADDED TO THE FAIRFUND AND DISTRIBUTED TO INJURED INVESTORS. REGARDLESS OFWHETHER ANY SUCH FAIR FUND DISTRIBUTION IS MADE, AMOUNTSORDERED TO BE PAID AS CIVIL MONEY PENALTIES PURSUANT TO THISORDER SHALL BE TREATED AS PENALTIES PAID TO THE GOVERNMENTFOR ALL PURPOSES, INCLUDING ALL TAX PURPOSES. TO PRESERVE THEDETERRENT EFFECT OF THE CIVIL PENALTY, RESPONDENT AGREES THATIT SHALL NOT, AFTER OFFSET OR REDUCTION IN ANY RELATED INVESTORACTION BASED ON RESPONDENT'S PAYMENT OF DISGORGEMENT IN THISACTION, ARGUE THAT IT IS ENTITLED TO, NOR SHALL IT FURTHER BENEFITBY OFFSET OR REDUCTION OF ANY PART OF RESPONDENT'S PAYMENT OFA CIVIL PENALTY IN THIS ACTION ("PENALTY OFFSET"). IF THE COURT INANY RELATED INVESTOR ACTION GRANTS SUCH A PENALTY OFFSET,RESPONDENT AGREES THAT IT SHALL, WITHIN 30 DAYS AFTER ENTRY OFA FINAL ORDER GRANTING THE PENALTY OFFSET, NOTIFY THECOMMISSION'S COUNSEL IN THIS ACTION AND PAY THE AMOUNT OF THEPENALTY OFFSET TO THE UNITED STATES TREASURY OR TO A FAIR FUND,AS THE COMMISSION DIRECTS. SUCH A PAYMENT SHALL NOT BE DEEMEDAN ADDITIONAL CIVIL PENALTY AND SHALL NOT BE DEEMED TO CHANGETHE AMOUNT OF THE CIVIL PENALTY IMPOSED IN THIS PROCEEDING.("RELATED INVESTOR ACTION" MEANS A PRIVATE DAMAGES ACTIONBROUGHT AGAINST RESPONDENT BY OR ON BEHALF OF ONE OR MOREINVESTORS BASED ON SUBSTANTIALLY THE SAME FACTS AS ALLEGED INTHE ORDER INSTITUTED BY THE COMMISSION IN THIS PROCEEDING.)







Allegations: IN 2004, FORMER REGISTERED REPRESENTATIVE ("RR")CONFESSED TOMISAPPROPRIATING FUNDS FROM CLIENTS OF HIS INDEPENDENT SECREGISTERED INVESTMENT ADVISER, WHICH WAS NOT AFFILIATED WITHOR CONTROLLED BY COMMONWEALTH. RR WAS ASSOCIATED WITHCOMMONWEALTH FROM 1991 UNTIL HE LEFT THE FIRM IN 2001.COMMONWEALTH, WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,CONSENTED TO AN SEC ADMINISTRATIVE ORDER FINDING THAT IN ITSCAPACITY AS A BROKER-DEALER, IT FAILED TO REASONABLY SUPERVISERR IN THAT IT HAD NOT ESTABLSIHED REASONABLE POLICIES ANDPROCEDURES FOR RESPONDING TO RED FLAGS RELATING TO RR'SOUTSIDE BUSINESS ACTIVITIES AND FOR REVIEWING HIS INCOMING MAIL.








Censure


CIVIL MONEY PENALTY



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE SECADMINISTRATIVE ORDER, COMMONWEALTH CONSENTED TO THEDESCRIBED SANCTIONS, WHEREIN IT WAS CENSURED, PAIDDISGORGEMENT OF $1 AND A CIVIL MONEY PENALTY OF $250,000.

Firm Statement ON SEPTEMBER 6, 2007,THE SEC ACCEPTED COMMONWEALTH'S OFFEROF SETTLEMENT AND ENTERED AN ADMINSTRATIVE ORDER. WITHOUTADMITTING OR DENYING THE FINDINGS, COMMONWEALTH CONSENTEDTO A CENSURE, DISGORGEMENT OF $1 AND A CIVIL MONEY PENALTY OF$250,000 FOR FAILING TO SUPERVISE A FORMER REGISTEREDREPRESENTATIVE.


Decision & Order of Offer of Settlement

Disclosure 9 of 23

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Initiated By: NASD


Docket/Case Number: E112004004301


Allegations: VIOLATION OF ARTICLE V, SECTION 2(C), 3(A) AN D3(B) OF NASD'S BY-LAWSAND NASD CONDUCT RULES 2110, 3010 AND 3070; RESPONDENT FAILEDTO FILE IN A TIMELY MANNER CERTAIN AMENDMENTS TO FORM U4 ANDFORM U5; IT FAILED TO FILE IN A TIMELY MANNER CERTAIN FORM U5 FORTERMINATED REGISTERED REPRESENTATIVES; IT'S SUPERVISORYSYSTEM AND PROCEDURES WERE NOT REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH NASD RULES CONCERNING REPORTINGOBLIGATIONS.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E112004004301







Resolution:

Other Sanctions Ordered: WITHIN 90 DAYS RESPONDENT SHALL CERTIFY IN WRITING TO NASD THATIT HAS REVIEWED ITS SYSTEMS AND PROCEDURES FOR COMPLYINGWITH ITS ARTICLE V AND NASD CONDUCT RULE 3070 REPORTINGOBLIGATIONS AND HAS ESTABLISHED SYSTEMS AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH THE REPORTINGREQUIREMENTS SET FORTH THEREIN.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENTMEMBER FIRM CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS; THEREFORE, FIRM IS CENSURED AND FINED$100,000.


No




Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.


Allegations: ALLEGED VIOLATION OF ARTICLE V, SECTION 2(C), 3(A) AND 3(B) OFNASD'S BYLAWS AND NASD CONDUCT RULES 2110, 3010 AND 3070,FAILURE TO FILE IN A TIMELY MANNER CERTAIN U4 AND U5 AMENDMENTSAND CERTAIN FORM U5'S FOR TERMINATED REPRESENTATIVES.FURTHER ALLEGED THAT SUPERVISORY SYSTEM AND PROCEDURES NOTREASONABLY DESIGNED TO COMPLY WITH NASD'S RULES ON REPORTINGOBLIGATIONS.










CENSURE


Docket/Case Number: E112004004301




Resolution:


Sanction Details: FIRM TO CERTIFY IN WRITING WITHIN 90 DAYS TO NASD THAT IT HASREVIEWED ITS SYSTEMS AND PROCEDURES FOR COMPLYING WITH ITSREPORTING OBLIGATIONS AND HAS ESTABLISHED SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHREPORTING OBLIGATIONS.



Disclosure 10 of 23

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Allegations: SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 17A-4THEREUNDER, AND NASD CONDUCT RULES 2830(K), 2110, 3110 -COMMONWEALTH FINANCIAL NETWORK MAINTAINED A REVENUESHARING (OR "SHELF SPACE") PROGRAM BETWEEN JANUARY 2001 ANDDECEMBER 2003 PURSUANT TO WHICH, IN RETURN FOR A FEE,PARTICIPATING MUTUAL FUND COMPLEXES RECEIVED PREFERENTIALTREATMENT FROM THE FIRM IN THE MARKETING OF FUNDS. THEBENEFITS PROVIDED TO THE MUTUAL FUND COMPLEXES INCLUDEDENHANCED VISIBILITY WITH THE FIRM'S SALES FORCE; TICKET CHARGEREIMBURSEMENT; PARTICIPATION IN FIRM CONFERENCES; PLACEMENTOF MATERIALS AND LINKS AND, IDENTIFICATION AS A STRATEGICPARTNER, ON THE FIR'S INTRANET WEBSITE; AND INCLUSION OFINFORMATION ABOUT THE FUNDS IN THE FIRM'S MONTHLY NEWSLETTER.THE PROGRAM INCLUDED SIX NON-PROPRIETY MUTUAL FUNDCOMPLEXES DURING THE PERIOD IN QUESTION. FOUR FUND COMPLEXESPAID SOME OR ALL OF THEIR FEES FOR PARTICIPATING IN THE PROGRAMBY DIRECTING APPROXIMATELY $5.41 MILLION IN MUTUAL FUNDPORTFOLIO BROKERAGE COMMISSIONS TO THE FIRM THROUGH TWOCLEARING BROKERS. THOSE PAYMENTS VIOLATED NASD CONDUCTRULES 2830(K) AND 2110. IN ADDITION THE FIRM FAILED TO RETAIN E-MAILS FOR THE TIME PERIOD REQUIRED BY THE BOOK AND RECORDSRULES.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=E112004004301


Initiated By: NASD




Docket/Case Number: EAF0400770002



SECTION 17(A) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 17A-4THEREUNDER, AND NASD CONDUCT RULES 2830(K), 2110, 3110 -COMMONWEALTH FINANCIAL NETWORK MAINTAINED A REVENUESHARING (OR "SHELF SPACE") PROGRAM BETWEEN JANUARY 2001 ANDDECEMBER 2003 PURSUANT TO WHICH, IN RETURN FOR A FEE,PARTICIPATING MUTUAL FUND COMPLEXES RECEIVED PREFERENTIALTREATMENT FROM THE FIRM IN THE MARKETING OF FUNDS. THEBENEFITS PROVIDED TO THE MUTUAL FUND COMPLEXES INCLUDEDENHANCED VISIBILITY WITH THE FIRM'S SALES FORCE; TICKET CHARGEREIMBURSEMENT; PARTICIPATION IN FIRM CONFERENCES; PLACEMENTOF MATERIALS AND LINKS AND, IDENTIFICATION AS A STRATEGICPARTNER, ON THE FIR'S INTRANET WEBSITE; AND INCLUSION OFINFORMATION ABOUT THE FUNDS IN THE FIRM'S MONTHLY NEWSLETTER.THE PROGRAM INCLUDED SIX NON-PROPRIETY MUTUAL FUNDCOMPLEXES DURING THE PERIOD IN QUESTION. FOUR FUND COMPLEXESPAID SOME OR ALL OF THEIR FEES FOR PARTICIPATING IN THE PROGRAMBY DIRECTING APPROXIMATELY $5.41 MILLION IN MUTUAL FUNDPORTFOLIO BROKERAGE COMMISSIONS TO THE FIRM THROUGH TWOCLEARING BROKERS. THOSE PAYMENTS VIOLATED NASD CONDUCTRULES 2830(K) AND 2110. IN ADDITION THE FIRM FAILED TO RETAIN E-MAILS FOR THE TIME PERIOD REQUIRED BY THE BOOK AND RECORDSRULES.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COMMONWEALTHFINANCIAL NETWORK CONSENTED TO THE DESCRIBED SANCTIONS ANDTO THE ENTRY OF FINDINGS; THEREFORE THE FIRM IS CENSURED ANDFINED $1,400,000.


No

Sanctions Ordered: CensureMonetary/Fine $1,400,000.00



Allegations: FOUND THAT FIRM VIOLATED NASD CONDUCT RULES 2830(K) AND 2110 BYMAINTAINING A REVENUE SHARING PROGRAM BETWEEN JANUARY, 2001AND DECEMBER, 2003, PURSUANT TO WHICH, IN RETURN FOR A FEE,PARTICIPATING MUTUAL FUND COMPLEXES RECEIVED PREFERENTIALTREATMENT IN THE MARKETING OF FUNDS. ADDITIONALLY, FIRM FOUNDTO HAVE VIOLATED SECTION 17(A) OF THE SECURITIES EXCHANGE ACTOF 1934 AND NASD CONDUCT RULE 3110 BY FAILING TO RETAIN EMAILSFOR THE REQUIRED TIME PERIOD.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=EAF0400770002






CENSURE


Docket/Case Number: CE2050012



FOUND THAT FIRM VIOLATED NASD CONDUCT RULES 2830(K) AND 2110 BYMAINTAINING A REVENUE SHARING PROGRAM BETWEEN JANUARY, 2001AND DECEMBER, 2003, PURSUANT TO WHICH, IN RETURN FOR A FEE,PARTICIPATING MUTUAL FUND COMPLEXES RECEIVED PREFERENTIALTREATMENT IN THE MARKETING OF FUNDS. ADDITIONALLY, FIRM FOUNDTO HAVE VIOLATED SECTION 17(A) OF THE SECURITIES EXCHANGE ACTOF 1934 AND NASD CONDUCT RULE 3110 BY FAILING TO RETAIN EMAILSFOR THE REQUIRED TIME PERIOD.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, COMMONWEALTHFINANCIAL NETWORK CONSENTED TO THE DESCRIBED SANCTIONS ANDTO THE ENTRY OF FINDINGS; THEREFORE THE FIRM IS CENSURED ANDFINED $1,400,000.

Firm Statement FOUND THAT FIRM VIOLATED NASD CONDUCT RULES 2830(K) AND 2110 BYMAINTAINING A REVENUE SHARING PROGRAM BETWEEN JANUARY, 2001AND DECEMBER, 2003, PURSUANT TO WHICH, IN RETURN FOR A FEE,PARTICIPATING MUTUAL FUND COMPLEXES RECEIVED PREFERENTIALTREATMENT IN THE MARKETING OF FUNDS. ADDITIONALLY, FIRM FOUNDTO HAVE VIOLATED SECTION 17(A) OF THE SECURITIES EXCHANGE ACTOF 1934 AND NASD CONDUCT RULE 3110 BY FAILING TO RETAIN EMAILSFOR THE REQUIRED TIME PERIOD.

Sanctions Ordered: CensureMonetary/Fine $1,400,000.00


Disclosure 11 of 23

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Allegations: RESPONDENTS ALLEGEDLY EFFECTED UNSUITABLE SECURITIESTRANSACTIONS FOR A MAINE COUPLE AND ALLEGEDLY FAILED TOREASONABLY SUPERVISE THE SALES AGENT ASSIGNED TO THEIRACCOUNT.






https://www.finra.org/rules-guidance/oversight-enforcement/finra-disciplinary-actions?search=CE2050012


Initiated By: MAINE OFFICE OF SECURITIES


Censure


CIVIL PENALTY




Principal Product Type: Equity Listed (Common & Preferred Stock)




Resolution:

Regulator Statement RESPONDENT HESS AND COMMONWEALTH ALLEGEDLY EFFECTEDSECURITIES TRANSACTIONS FOR A MAINE COUPLE WHICH WEREUNSUITABLE FOR THE CLIENTS UNDER THE CIRCUMSTANCES. INADDITION, RESPONDENTS COMMONWEALTH, KELLY AND WHEELERALLEGEDLY FAILED TO REASONABLY SUPERVISE HESS IN CONNECTIONWITH THIS ACCOUNT. THE PARTIES ENTERED INTO A CONSENTAGREEMENT, IN WHICH THEY NEITHER ADMITTED NOR DENIED LIABILITY,WHEREBY COMMONWEALTH WILL PAY $52,193 IN RESTITUTION TO THETWO MAINE INVESTORS AT ISSUE IN THE CASE. THIS CONSENTAGREEMENT RESOLVES MATTERS REFERENCED IN THE EARLIER NOTICEOF INTENT.


No

Other









Initiated By: MAINE OFFICE OF SECURITIES


Censure


CIVIL PENALTY



Principal Product Type: Equity Listed (Common & Preferred Stock)




Resolution:

Firm Statement RESPONDENT HESS AND COMMONWEALTH ALLEGEDLY EFFECTEDSECURITIES TRANSACTIONS FOR A MAINE COUPLE WHICH WEREUNSUITABLE FOR THE CLIENTS UNDER THE CIRCUMSTANCES. INADDITION, RESPONDENTS COMMONWEALTH, KELLY AND WHEELERALLEGEDLY FAILED TO REASONABLY SUPERVISE HESS IN CONNECTIONWITH THIS ACCOUNT. THE PARTIES ENTERED INTO A CONSENTAGREEMENT, IN WHICH THEY NEITHER ADMITTED NOR DENIED LIABILITY,WHEREBY COMMONWEALTH WILL PAY $52,193 IN RESTITUTION TO THETWO MAINE INVESTORS AT ISSUE IN THE CASE. THIS CONSENTAGREEMENT RESOLVES MATTERS REFERENCED IN THE EARLIER NOTICEOF INTENT.

Other

Disclosure 12 of 23

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Initiated By: ILLINOIS SECURITIES DEPARTMENT




Principal Product Type: Options

Allegations: THE RESPONDENT, A FEDERAL COVERED INVESTMENT ADVISER INILLINOIS FAILED TO REPORT A BRANCH OFFICE.








Prohibition



Other Product Type(s): INVESTMENT ADVISER COMAPNY


Resolution:


Sanction Details: THE RESPONDENT SHALL SUBMIT $350 FOR CERTAIN COSTS OF THEINVESTIGATION. THE NOTICE OF HEARING ISSUED IN THIS MATTER ISDISMISSED.

Regulator Statement A NOTICE OF HEARING, DATED MAY 31, 2001. THE HEARING ISSCHEDULED FOR JULY 18, 2001. A SETTLEMENT AGREEMENT, ISSUEDJUNE 13, 2001. CONTACT: (217) 785-4948

Sanctions Ordered: Monetary/Fine $250.00

Settled


Initiated By: STATE OF ILLINOIS SECURITIES DEPARTMENT







Other Product Type(s): INVESTMENT ADVISOR COMPANY

Allegations: THE RESPONDENT, A FEDERAL COVERED INVESTMENT ADVISER INILLINOIS FAILED TO REPORT A BRANCH OFFICE.



Resolution:


Settled







Sanction Details: THE RESPONDENT SHALL SUBMIT $350 FOR CERTAIN COSTS OF THEINVESTIGATION. THE NOTICE OF HEARING ISSUED IN THIS MATTER ISDISMISSED.


Disclosure 13 of 23

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Reporting Source: Firm

Initiated By: STATE OF IDAHO


Denial



Docket/Case Number:



Allegations: THE STATE OF IDAHO ALLEGED THAT CES FAILED TO COMPLETE THEBROKER/DEALER REGISTRATION APPLICATION.



Resolution:

Firm Statement CES APPLIED FOR BROKER/DEALER REGISTRATION IN THE STATE OFIDAHO. A DENIAL OF REGISTRATION WAS MADE DUE TO FAILURE TOCOMPLETE THE APPLICATION. AS OF 7/15/88 AN ADMINISTRATIVE ORDERDATED 2/10/87 MAY OR MAY NOT HAVE BEEN FILED WITH THE CRD,RECORDING THIS INCOMPLETE APPLICATION. NO FILE NUMBER. THISPROBLEM WAS LATER RESOLVED. CURRENTLY, CES IS EFFECTIVELYLICENSED AS A BROKER/DEALER IN IDAHO.

Order

Disclosure 14 of 23

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Allegations: CES APPLICATION FOR REGISTRATION AS A BROKER/DEALER IN THESTATE OF ALABAMA WAS DEEMED INCOMPLETE.







Initiated By: STATE OF ALABAMA


Other


ADMINISTRATIVE


Docket/Case Number:



Allegations: CES APPLICATION FOR REGISTRATION AS A BROKER/DEALER IN THESTATE OF ALABAMA WAS DEEMED INCOMPLETE.


Resolution:

Firm Statement ON MARCH 11, 1986, CES APPLIED FOR REGISTRATION AS ABROKER/DEALER IN THE STATE OF ALABAMA. ON MARCH 2, 1987, ANORDER DENYING APPLICATION WAS ENTERED DUE TO AN INCOMPLETEAPPLICATION, WHICH CONSTITUTED GROUNDS FOR DENIAL. THISPROBLEM WAS LATER RESOLVED. CURRENTLY, CES IS EFFECTIVELYLICENSED AS A BROKER/DEALER IN ALABAMA.

Order

Disclosure 15 of 23

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Initiated By: NEBRASKA SECURITIES COMMISSIONER


Other


ADMINISTRATIVE


Docket/Case Number:



Allegations: NEBRASKA ALLEGED COMMONWEALTH EQUITY SERVICES, INC. FAILED TORENEW ITS BROKER/DEALER REGISTRATION WITH THE STATE.


Resolution: Other 52©2020 FINRA. All rights reserved. Report about COMMONWEALTH FINANCIAL NETWORK






Resolution:

Firm Statement ON APRIL 13, 1987, A CANCELLATION ORDER WAS ISSUED AGAINSTCOMMONWEALTH EQUITY SERVICES, INC. ("CES") BY THE NEBRASKASECURITIES COMMISSIONER FOR FAILURE TO RENEW ITSBROKER/DEALER REGISTRATION IN THE STATE OF NEBRASKA. THISPROBLEM WAS LATER RESOLVED. CURRENTLY, CES IS EFFECTIVELYREGISTERED AS A BROKER/DEALER IN THE STATE OF NEBRASKA.

Other

Disclosure 16 of 23

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Censure



Docket/Case Number:


Other Product Type(s): UNREGISTERED SECURITIES

Allegations: THE COMPLAINT ALLEGED THE SALE OF UNREGISTERED SECURITIES BYCOMMONWEALTH EQUITY SERVICES, INC. AND ITS REGISTEREDREPRESENTATIVE, MR. ROBERT PEEK.



Resolution:


Sanction Details: CES WAS CENSURED AND PAID A VOLUNTARY FINE OF $1,000.00

Firm Statement COMMONWEALTH EQUITY SERVICES, INC. ("CES"), HAVING SUBMITTED ASTIPULATION AND CONSENT, CONSENTED TO A FINAL ORDER OF THEMASSACHUSETTS SECURITIES DIVISION: THE FIRM WAS CENSURED ANDMADE A VOLUNTARY PAYMENT OF $1,000.00. THE PROCEEDING RESULTEDFROM THE SALE OF AN UNREGISTERED SECURITY BY A REGISTEREDREPRESENTATIVE OF CES, MR. ROBERT PEEK. THE FINAL ORDER WASDATED FEBRUARY 10, 1986.


Order





www.finra.org/brokercheck User GuidanceCOMMONWEALTH EQUITY SERVICES, INC. ("CES"), HAVING SUBMITTED ASTIPULATION AND CONSENT, CONSENTED TO A FINAL ORDER OF THEMASSACHUSETTS SECURITIES DIVISION: THE FIRM WAS CENSURED ANDMADE A VOLUNTARY PAYMENT OF $1,000.00. THE PROCEEDING RESULTEDFROM THE SALE OF AN UNREGISTERED SECURITY BY A REGISTEREDREPRESENTATIVE OF CES, MR. ROBERT PEEK. THE FINAL ORDER WASDATED FEBRUARY 10, 1986.

Disclosure 17 of 23

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Initiated By: NEW HAMPSHIRE BSR




Docket/Case Number: INV97-039


Principal Product Type:


Allegations: RESPONDENT COMMONWEALTH EQUITY SERVICES INC.(CES) EMPLOYED AN UNLICENSED AGENT FROM APRIL 1996 TO JULY 1997WHO TRANSACTED SECURITIES BUSINESS IN THE STATE OF NEWHAMPSHIRE, AND FAILED TO REASONABLY SUPERVISE SUCH AGENT, INVIOLATION OF PROVISIONS OF RSA 421-B AND REGULATIONSTHEREUNDER.



Resolution:


Sanction Details: RESPONDENT CES ENTERED INTO A CONSENT AGREEMENTWITH THE BUREAU WHEREBY, WITH RESPONDENT NEITHER ADMITTINGNORDENYING THE ALLEGATIONS, THE BUREAU FOUND THAT RESPONDENTHADEMPLOYED AN UNLICENSED AGENT IN VIOLATION OF RSA 421-B:6,II,AND FAILED TO REASONABLY SUPERVISE WITHIN THE MEANING OF RSA421-B:10. RESPONDENT ALSO AGREED TO PAY AN ADMINISTRATIVE FINEIN THE AMOUNT OF $5,000.

Sanctions Ordered: Monetary/Fine $5,000.00

Consent






Regulator Statement CONSENT AGREEMENT. SEE RESULTS. CONTACT:ENFORCEMENT (603) 271-1463


Initiated By: NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION


Restitution



Docket/Case Number: INV-97-039


Other Product Type(s): UNREGISTERED SECURITIES

Allegations: THE STATE OF NEW HAMPSHIRE ALLEDGED THAT ONE OF CES'SREPRESENTATIVES CONDUCTED UNLICENSED SECURITIES BUSINESS INTHE STATE OF NEW HAMPSHIRE AND THAT CES FAILED TO SUPERVISETHE REPSENTATIVE.



Resolution:


Sanction Details: WHILE NEITHER ADMITTING OR DENYING GUILT, CES AGREED TO PAY ANADMINISTRATIVE FINE OF $5,000.00.

Firm Statement ON 1/12/98 THE NH BUREAU OF SECURITIES REGULATION ("BSR")ISSUES ACONSENT AGREEMENT AGAINST CES. THE BUREAU FOUND THAT FROM4/96 THROUGH 7/97 A REPRESENTATIVE OF CES HAD CONDUCTEDUNLICENSED SECURITIES BUSINESS IN THE STATE OF NH IN VIOLATIONOF RSA 421-B:6II. THE BSR FURTHER FOUND THAT CES HAD FAILED TOREASONABLY SUPERVISE THE REPRESENTATIVE UNDER RSA 421-B-10.WHILE NEITHER ADMITTING OR DENYING GUILT, CES AGREED TO PAY ANADMINISTRATIVE FINE OF $5,000.00.

Sanctions Ordered: Monetary/Fine $5,000.00

Dismissed

Disclosure 18 of 23

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Docket/Case Number: C11960056



Allegations:



Resolution:


Sanction Details:

Regulator Statement ON APRIL 9, 1997, DISTRICT NO. 11 NOTIFIED COMMONWEALTH EQUITYSERVICES, INC. THAT THE LETTER OF ACCEPTANCE, WAIVER ANDCONSENT NO. C11960056 WAS ACCEPTED; THEREFORE, RESPONDENTMEMBER IS CENSURED AND FINED $250 - (MSRB RULE G-37 -RESPONDENT MEMBER FAILED TO COMPLY WITH THE FILINGREQUIREMENTSOF MSRB RULE G-37 IN THAT IT FAILED TO TIME FILE FORM G-37/38IDENTIFYING ISSUERS WITH WHOM THEY HAD ENGAGED IN MUNICIPALSECURITIES BUSINESS).

***$250.00 PAID ON 5/5/97, INVOICE #97-11-347***

Sanctions Ordered: CensureMonetary/Fine $250.00



Allegations: THE NASD ALLEDGED THAT CES VIOLATED MSRB RULE G-37. CES FAILEDTO FILE FORM G-37/38 IN A TIMELY MANNER. NO DAMAGES WEREALLEDGED.







Initiated By: NASD'S DISTRICT BUSINESS CONDUCT COMMITTEE FOR DISTRICT 11


Other


ADMINISTRATIVE


Docket/Case Number: AWC NO.: C11960056



THE NASD ALLEDGED THAT CES VIOLATED MSRB RULE G-37. CES FAILEDTO FILE FORM G-37/38 IN A TIMELY MANNER. NO DAMAGES WEREALLEDGED.


Resolution:


Sanction Details: CES PAID A MONETARY FINE OF $250.00

Firm Statement CES FAILED TO FILE THE REQUIRED FORM G-37/38 IN CONNECTION WITHUNDERWRITING A BOND ISSUE. THIS REPRESENTS A TECHNICALVIOLATION OF THE RECENTLY AMENDED MSRB RULE G-37.



Disclosure 19 of 23

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Initiated By: MARYLAND


Suspension



Docket/Case Number:




Allegations: FAILURE TO FILE FINANCIALREPORTS.









Resolution:

Other Sanctions Ordered: N/A

Sanction Details: N/A

Regulator Statement ORDER OF SUMMARYSUSPENSION AND ORDER TO SHOW CAUSE WAS ISSUED TOCOMMONWEALTHEQUITY SERVICES ON APRIL 20, 1988, FOR FAILURE TO FILE FINANCIALREPORTS. APPLICANT COMPLIED MAY 6 AND MAY 9, 1988, RESPECTIVELY.AN ORDER TO REINSTATE FIRM'S REGISTRATION WAS ISSUED ON JUNE1, 1988. NO DOCKET/CASE NUMBER PROVIDED, DATED APRIL 20, 1988.

Sanctions Ordered: Suspension

Order


Initiated By: MARYLAND DIVISION OF SECURITIES


Other


ADMINISTRATIVE


Docket/Case Number:



Allegations: MARYLAND ALLEGED THAT CES FAILED TO FILE ITS ANNUAL AUDITREPORT WITH THE STATE WITHIN 45 DAYS OF THAT REPORT.



Resolution:

Firm Statement ON APRIL 20, 1988, AN ORDER OF SUMMARY SUSPENSION AND AN ORDERTO SHOW CAUSE WAS ISSUED AGAINST CES BY THE MARYLAND DIVISIONOF SECURITIES FOR FAILURE TO FILE AN ANNUAL AUDIT REPORT WITHIN45 DAYS OF THAT REPORT. THE DIVISION ISSUED AN ORDER OFREINSTATEMENT ON JUNE 1, 1988. CURRENTLY, CES IS EFFECTIVELYLICENSED AS A BROKER/DEALER IN MARYLAND.

Order






ON APRIL 20, 1988, AN ORDER OF SUMMARY SUSPENSION AND AN ORDERTO SHOW CAUSE WAS ISSUED AGAINST CES BY THE MARYLAND DIVISIONOF SECURITIES FOR FAILURE TO FILE AN ANNUAL AUDIT REPORT WITHIN45 DAYS OF THAT REPORT. THE DIVISION ISSUED AN ORDER OFREINSTATEMENT ON JUNE 1, 1988. CURRENTLY, CES IS EFFECTIVELYLICENSED AS A BROKER/DEALER IN MARYLAND.

Disclosure 20 of 23

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Docket/Case Number: C11960008



Allegations:



Resolution:


Sanction Details:

Regulator Statement ON MARCH 12, 1996, DISTRICT NO. 11 NOTIFIED RESPONDENTSCOMMONWEALTH EQUITY SERVICES, INC. AND DAVID L. KELLY THAT THELETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. C11960008 WASACCEPTED; THEREFORE, THEY ARE CENSURED AND FINED $20,000,JOINTLY AND SEVERALLY. IN ADDITION, RESPONDENT MEMBER INORDERED TO INSURE FUTURE COMPLIANCE, AGREES TO IMPLEMENTCERTAIN IMPROVEMENTS IN THE FIRM'S SUPERVISORY, COMPLIANCE ANDMANAGEMENT STRUCTURE AS DESCRIBED IN THEIR STATEMENT OFMITIGATION; AGREES TO REFUND $55,235 TO AFFECTED CUSTOMERSREPRESENTING ALL COMMISSIONS CHARGED THEM IN RELATION TOTRANSACTIONS - (ARTICLE III, SECTIONS 1 AND 27(a) OF THE RULESOF FAIR PRACTICE - RESPONDENT MEMBER, ACTING THROUGHRESPONDENTKELLY, FAILED TO ENFORCE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIESLAWS AND REGULATIONS AND WITH THE RULES OF THE NASD IN THAT ITFAILED TO REVIEW AND APPROVE IN WRITING THE OPENING OF THE NEWACCOUNTS IN A TIMELY MANNER, FAILED TO REVIEW THEAFOREMENTIONED PURCHASE TRANSACTIONS IN A TIMELY MANNER, ANDFAILED TO REVIEW INFORMATION AS SET FORTH ON THE NEW ACCOUNTINFORMATION FORMS REGARDING THE SUITABILITY OF THE PURCHASEOFSTOCK BY THE AFOREMENTIONED ACCOUNTS IN A TIMELY MANNER).***$20,000.00 PAID J&S ON 4/2/96, INVOICE #96-11-224***

***PER DISTRICT 11 - RECEIVED PROOF OF RESTITUTION AS OF7/97***








ON MARCH 12, 1996, DISTRICT NO. 11 NOTIFIED RESPONDENTSCOMMONWEALTH EQUITY SERVICES, INC. AND DAVID L. KELLY THAT THELETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. C11960008 WASACCEPTED; THEREFORE, THEY ARE CENSURED AND FINED $20,000,JOINTLY AND SEVERALLY. IN ADDITION, RESPONDENT MEMBER INORDERED TO INSURE FUTURE COMPLIANCE, AGREES TO IMPLEMENTCERTAIN IMPROVEMENTS IN THE FIRM'S SUPERVISORY, COMPLIANCE ANDMANAGEMENT STRUCTURE AS DESCRIBED IN THEIR STATEMENT OFMITIGATION; AGREES TO REFUND $55,235 TO AFFECTED CUSTOMERSREPRESENTING ALL COMMISSIONS CHARGED THEM IN RELATION TOTRANSACTIONS - (ARTICLE III, SECTIONS 1 AND 27(a) OF THE RULESOF FAIR PRACTICE - RESPONDENT MEMBER, ACTING THROUGHRESPONDENTKELLY, FAILED TO ENFORCE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIESLAWS AND REGULATIONS AND WITH THE RULES OF THE NASD IN THAT ITFAILED TO REVIEW AND APPROVE IN WRITING THE OPENING OF THE NEWACCOUNTS IN A TIMELY MANNER, FAILED TO REVIEW THEAFOREMENTIONED PURCHASE TRANSACTIONS IN A TIMELY MANNER, ANDFAILED TO REVIEW INFORMATION AS SET FORTH ON THE NEW ACCOUNTINFORMATION FORMS REGARDING THE SUITABILITY OF THE PURCHASEOFSTOCK BY THE AFOREMENTIONED ACCOUNTS IN A TIMELY MANNER).***$20,000.00 PAID J&S ON 4/2/96, INVOICE #96-11-224***

***PER DISTRICT 11 - RECEIVED PROOF OF RESTITUTION AS OF7/97***


Initiated By: NASD'S DISTRICT BUSINESS CONDUCT COMMITTEE FOR DISTRICT 11


Other



Docket/Case Number: AWC NO. C11960008



Allegations: THE NASD ALLEGED THAT CES, ACTING THROUGH MR. DAVID L. KELLY,CES' MANAGER OF TRADING AND OPERATIONS, FAILED TO ENFORCE THEFIRM'S WRITTEN SUPERVISORY PROCEDURES.



Resolution:

Other Sanctions Ordered: IMPROVEMENTS TO THE FIRMS SUPERVISORY COMPLIANCE ANDMANAGEMENT STRUCTURE AND REFUNDED COMMISSIONS TO AFFECTEDCUSTOMERS.








Other Sanctions Ordered: IMPROVEMENTS TO THE FIRMS SUPERVISORY COMPLIANCE ANDMANAGEMENT STRUCTURE AND REFUNDED COMMISSIONS TO AFFECTEDCUSTOMERS.

Sanction Details: COMMONWEALTH AND KELLY WERE CENSURED AND FINED $20,000, JOINTAND SEVERAL. COMMONWEALTH INSTITUED IMPROVEMENTS TO THEFIRMS SUPERVISORY COMPLIANCE AND MANAGEMENT STRUCTURE ANDREFUNDED $55,235 IN COMMISSIONS TO AFFECTED CUSTOMERS.

Firm Statement ON MARCH 12, 1996, CES AND MR. DAVID L. KELLY, MANAGER OF TRADINGAND OPERATIONS, SUBMITTED A NOTICE OF ACCEPTANCE, WAIVER ANDCONSENT. CES SUBMITTED TO THIS NOTICE OF ACCEPTANCE, WAIVERAND CONSENT IN ORDER TO AVOID PROTRACTED DISPUTE WITH THENASD.

Disclosure 21 of 23

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Initiated By: NORTH CAROLINA


Suspension







Allegations: SEE ITEM #13



Resolution:



Regulator Statement COMMONWEALTH EQUITYSERVICES, INC. FILED AN APPLICATION TO BE LICENSED IN NORTHCAROLINA. HOWEVER, THE FORM BD FAILED TO DISCLOSE A DENIAL OFREGISTRATION BY ALABAMA. COMMONWEALTH ENTERED INTO ACONSENTORDER WITH NORTH CAROLINA WHEREBY IT WOULD BE LICENSED ON1/4/89 AND WOULD RECEIVE A 6 MONTHS RETROACTIVE SUSPENSION.DOCKET/CASE #88-108, DATED JANUARY 4, 1989


Consent






COMMONWEALTH EQUITYSERVICES, INC. FILED AN APPLICATION TO BE LICENSED IN NORTHCAROLINA. HOWEVER, THE FORM BD FAILED TO DISCLOSE A DENIAL OFREGISTRATION BY ALABAMA. COMMONWEALTH ENTERED INTO ACONSENTORDER WITH NORTH CAROLINA WHEREBY IT WOULD BE LICENSED ON1/4/89 AND WOULD RECEIVE A 6 MONTHS RETROACTIVE SUSPENSION.DOCKET/CASE #88-108, DATED JANUARY 4, 1989


Initiated By: NORTH CAROLINA STATE SECURITIES DIVISION


Suspension



Docket/Case Number: 88-108-II



Allegations: NORTH CAROLINA ALLEDGED THAT CES HAD FAILED TO DISCLOSE THATTHE STATE OF ALABAMA HAD DENIED CES'S BROKER/DEALERREGISTRATION ON ITS APPLICATION FOR BROKER/DEALER REGISTRATIONIN NORTH CAROLINA.



Resolution:


Sanction Details: ON 1/4/89 NORTH CAROLINA EXTENDED A CONSENT TO REGISTRATIONAND SUSPENSION WHEREBY CES WAS LICENSED IN THE STATE OFNORTH CAROLINA AND RETROACTIVELY SUSPENDED FOR A PERIOD OFSIX MONTHS. SAID SUSPENSION WAS LIFTED ON THE DATE OF THATORDER.

Firm Statement ON 5/11/88, CES APPLIED FOR APPLICATION IN THE STATE OF NORTHCAROLINA. ON 6/10/88 AN ORDER TO SHOW CAUSE WAS ISSUED FORFAILING TO DISCLOSE THAT THE STATE OF ALABAMA DENIED CES'SAPPLICATION. ON 1/4/89 NORTH CAROLINA EXTENDED A CONSENT TOREGISTRATION AND SUSPENSION WHEREBY CES WAS LICENSED IN THESTATE OF NORTH CAROLINA AND RETROACTIVELY SUSPENDED FOR APERIOD OF SIX MONTHS. SAID SUSPENSION WAS LIFTED ON THE DATEOF THAT ORDER. CURRENTLY, CES IS EFFECTIVELY LICENSED AS ABROKER/DEALER IN NORTH CAROLINA.


Order





www.finra.org/brokercheck User GuidanceON 5/11/88, CES APPLIED FOR APPLICATION IN THE STATE OF NORTHCAROLINA. ON 6/10/88 AN ORDER TO SHOW CAUSE WAS ISSUED FORFAILING TO DISCLOSE THAT THE STATE OF ALABAMA DENIED CES'SAPPLICATION. ON 1/4/89 NORTH CAROLINA EXTENDED A CONSENT TOREGISTRATION AND SUSPENSION WHEREBY CES WAS LICENSED IN THESTATE OF NORTH CAROLINA AND RETROACTIVELY SUSPENDED FOR APERIOD OF SIX MONTHS. SAID SUSPENSION WAS LIFTED ON THE DATEOF THAT ORDER. CURRENTLY, CES IS EFFECTIVELY LICENSED AS ABROKER/DEALER IN NORTH CAROLINA.

Disclosure 22 of 23

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Initiated By: ALABAMA


Denial



Docket/Case Number: ODA-87-20




Allegations: SEE ITEM #13



Resolution:



Regulator Statement ON MARCH 11, 1986,COMMONWEALTH EQUITY SERVICES MADE APPLICATION FORREGISTRATIONAS A BROKER/DEALER WITHIN THE STATE OF ALABAMA. ON MARCH 18,1986, A PRELIMINARY ORDER OF DENIAL WAS ENTERED ANDCOMMONWEALTHEQUITY SERVICES WAS GIVEN 30 DAYS TO RESPOND AND/OR REQUEST AHEARING ON THE ORDER. ON MAY 7, 1986 AND ON JULY 16, 1986,FOLLOW-UP CORRESPONDENCE WAS SENT TO COMMONWEALTH EQUITYSERVICES AND THEY FAILED TO RESPOND. ON JANUARY 20, 1987,COMMONWEALTH EQUITY SERVICES WAS PROPERLY NOTIFIED THAT THEPRELIMINARY ORDER OF DENIAL WAS SET FOR A HEARING BEFORE THECOMMISSION FOR FEBRUARY 2, 1987. COMMONWEALTH EQUITYSERVICESHAS FAILED TO RESPOND TO THE NOTICE OF HEARING AND FAILED TOAPPEAR AT THE APPOINTED TIME. ON MARCH 2, 1987, A FORMAL ORDERDENYING APPLICATION FOR BROKER/DEALER REGISTRATION WASENTEREDAS TO COMMONWEALTH EQUITY SERVICES. DOCKET/CASE NO. ODA-87-20.

Sanctions Ordered: Revocation/Expulsion/Denial

Decision






ON MARCH 11, 1986,COMMONWEALTH EQUITY SERVICES MADE APPLICATION FORREGISTRATIONAS A BROKER/DEALER WITHIN THE STATE OF ALABAMA. ON MARCH 18,1986, A PRELIMINARY ORDER OF DENIAL WAS ENTERED ANDCOMMONWEALTHEQUITY SERVICES WAS GIVEN 30 DAYS TO RESPOND AND/OR REQUEST AHEARING ON THE ORDER. ON MAY 7, 1986 AND ON JULY 16, 1986,FOLLOW-UP CORRESPONDENCE WAS SENT TO COMMONWEALTH EQUITYSERVICES AND THEY FAILED TO RESPOND. ON JANUARY 20, 1987,COMMONWEALTH EQUITY SERVICES WAS PROPERLY NOTIFIED THAT THEPRELIMINARY ORDER OF DENIAL WAS SET FOR A HEARING BEFORE THECOMMISSION FOR FEBRUARY 2, 1987. COMMONWEALTH EQUITYSERVICESHAS FAILED TO RESPOND TO THE NOTICE OF HEARING AND FAILED TOAPPEAR AT THE APPOINTED TIME. ON MARCH 2, 1987, A FORMAL ORDERDENYING APPLICATION FOR BROKER/DEALER REGISTRATION WASENTEREDAS TO COMMONWEALTH EQUITY SERVICES. DOCKET/CASE NO. ODA-87-20.


Initiated By: STATE OF ALABAMA, IDAHO, INDIANA, MINNESOTA, NEBRASKA &OKLAHOMA


Other


ADMINISTRATIVE


Docket/Case Number:



Allegations: THE ABOVE LISTED STATES ALLEGED THAT COMMONWEALTH EQUITYSERVICES, INC.'S APPLICATIONS FOR BROKER/DEALER REGISTRATIONWERE INCOMPLETE.



Resolution:

Firm Statement IN MARCH OF 1986, COMMONWEALTH EQUITY SERVICES, INC. ("CES")FILED FOR BROKER/DEALER REGISTRATION IN THE ABOVE LISTEDSTATES. THE APPLICATIONS WERE CONSIDERED INCOMPLETE. FINALORDERS TO REVOKE BROKER/DEALER REGISTRATION WERE ENTEREDBY EACH STATE'S SECURITIES DIVISION, DUE TO THE INCOMPLETEAPPLICATIONS. THESE PROBLEMS WERE LATER RESOLVED. CURRENTLY,CES IS EFFECTIVELY LICENSED AS A BROKER/DEALER IN EACH OF THESESTATES.

Order

Disclosure 23 of 23

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Initiated By: OKLAHOMA


Other



Docket/Case Number:




Allegations: FAILED TO MAKE POST-REGISTRATION FILING REPORT.



Resolution:



Regulator Statement FAILED TO MAKE POST-REGISTRATION FILING REPORT.


Decision


Initiated By: STATE OF OKLAHOMA


Revocation



Docket/Case Number: DOCUMENT NUMBER 033Q



Allegations: FIRM FAILED TO MAKE POST REGISTRATION FILING REPORT









Resolution:


Sanction Details: FORM U-6 (8060 32486) DISCLOSES: FAILED TO MAKE POST REGISTRATIONFILING REPORT.

Firm Statement COMMONWEALTH FINANCIAL FAILED TO FILE THE POST REGISTRATIONFILING REPORT IN THE STATE OF OKLAHOMA DUE JULY 31ST, 1986. ONOCTOBER 28, 1986 AN ORDER REVOKING BROKER-DEALER REGISTRATIONWAS ISSUED AGAINST THE FIRM. THE FIRM REAPPLIED AND WASGRANTED REGISTRATION IN OKLAHOMA IN JUNE 4, 1990 AND HAS BEENCONTINOUSLY REGISTERED SINCE.


Order






Civil - Pending

This type of disclosure event involves a pending civil court action that with seek an injunction to cease certain investment-related activity or alleges a violation of any investment-related statute or regulation.

Disclosure 1 of 1



SEC LITIGATION RELEASE 24550, AUGUST 1, 2019: THE SECURITIES ANDEXCHANGE COMMISSION TODAY CHARGED THE FIRM WITH FAILING TODISCLOSE MATERIAL CONFLICTS OF INTEREST RELATED TO REVENUESHARING IT RECEIVED FOR CERTAIN CLIENT INVESTMENTS. ACCORDINGTO THE SEC'S COMPLAINT, THE FIRM HAD A REVENUE SHARINGAGREEMENT WITH THE BROKER IT REQUIRED MOST OF ITS CLIENTS USEFOR TRADES IN THEIR ACCOUNTS. UNDER THAT AGREEMENT, THE FIRMRECEIVED A PORTION OF THE MONEY THAT CERTAIN MUTUAL FUNDCOMPANIES PAID TO THE BROKER TO BE ABLE TO SELL THEIR FUNDSTHROUGH THE BROKER, IF THE FIRM INVESTED CLIENT ASSETS INCERTAIN SHARE CLASSES OF THOSE FUNDS. THE FIRM RECEIVED OVER$100 MILLION IN REVENUE SHARING FROM THE BROKER RELATED TOCLIENT INVESTMENTS IN CERTAIN SHARE CLASSES OF "NO TRANSACTIONFEE" AND "TRANSACTION FEE" MUTUAL FUNDS. THE SEC'S COMPLAINTALLEGES THAT THE FIRM BREACHED ITS FIDUCIARY DUTY TO ITS CLIENTSBY FAILING TO DISCLOSE THE CONFLICTS OF INTEREST CREATED BY ITSRECEIPT OF COMPENSATION THROUGH THE REVENUE SHARINGAGREEMENT. SPECIFICALLY, THE SEC'S COMPLAINT ALLEGES THAT THEFIRM FAILED TO TELL ITS CLIENTS THAT (I) THERE WERE MUTUAL FUNDSHARE CLASS INVESTMENTS THAT WERE LESS EXPENSIVE TO CLIENTSTHAN SOME OF THE MUTUAL FUND SHARE CLASS INVESTMENTS THATRESULTED IN REVENUE SHARING PAYMENTS TO THE FIRM, (II) THEREWERE MUTUAL FUND INVESTMENTS THAT DID NOT RESULT IN ANYREVENUE SHARING PAYMENTS TO THE FIRM, AND (III) THERE WEREREVENUE SHARING PAYMENTS TO THE FIRM UNDER THE BROKER'S "TRANSACTION FEE" PROGRAM. AS A RESULT OF THESE MATERIALOMISSIONS, THE FIRM'S ADVISORY CLIENTS INVESTED WITHOUT A FULLUNDERSTANDING OF ITS COMPENSATION MOTIVES AND INCENTIVES. THEFIRM FAILED TO ADOPT AND IMPLEMENT WRITTEN POLICIES ANDPROCEDURES REASONABLY DESIGNED TO PREVENT ITS BREACH OFFIDUCIARY DUTY IN FAILING TO DISCLOSE FULLY AND FAIRLY ITSCONFLICTS OF INTEREST IN RECEIVING SUBSTANTIAL REVENUE SHARINGFROM THE BROKER. THE COMPLAINT ALLEGES THAT COMMONWEALTHVIOLATED THE ANTIFRAUD AND COMPLIANCE PROVISIONS OF SECTION206(2) AND 206(4) OF THE INVESTMENT ADVISERS ACT OF 1940 AND RULE206(4)-7 THEREUNDER.

Allegations:

Current Status: Pending







Relief Sought: Injunction

Other Relief Sought: DISGORGEMENT; PREJUDGEMENT INTEREST; CIVIL PENALTY

Date Court Action Filed: 08/01/2019


Other Product Types:

Court Details: UNITED STATES DISTRICT COURT FOR THE DISTRICT OFMASSACHUSETTS - BOSTON, MASSACHUSETTS - CASE NO. 1:19-CV-11655


Initiated By: SECURITIES AND EXCHANGE COMMISSION

Relief Sought: Injunction

Other Relief Sought: DISGORGEMENT PLUS PREJUDGMENT INTEREST, CIVIL PENALTY

Date Court Action Filed: 08/01/2019


Other Product Types:

Court Details: UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETTSCOUNTY OF SUFFOLKCASE NO. 1:19-CV-11655

THE SEC ALLEGES THAT THE FIRM, IN ITS ROLE AS A REGISTEREDINVESTMENT ADVISER, FAILED TO DISCLOSE MATERIAL CONFLICTS OFINTEREST RELATED TO CERTAIN REVENUE SHARING ARRANGEMENTSWITH ITS CLEARING FIRM IN VIOLATION OF THE PROVISIONS OF SECTION206(2) OF THE ADVISERS ACT AND FAILED TO ADOPT AND IMPLEMENTWRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TOIDENTIFY AND TO ENSURE THE DISCLOSURE OF MATERIAL CONFLICTS OFINTEREST ARISING FROM ITS REVENUE SHARING ARRANGEMENT WITHITS CLEARING FIRM IN VIOLATION OF SECTION 206(4) OF THE ADVISERSACT AND RULE 206(4)-7 THEREUNDER.

Allegations:

Current Status: Pending

Date Notice/Process Served: 08/01/2019

Firm Statement THE SEC ALLEGES THAT THE FIRM, IN ITS ROLE AS A REGISTEREDINVESTMENT ADVISER FOR THE PERIOD JULY 2014 THROUGH DECEMBER2018, FAILED TO DISCLOSE MATERIAL CONFLICTS OF INTEREST RELATEDTO CERTAIN REVENUE SHARING ARRANGEMENTS WITH ITS CLEARINGFIRM IN VIOLATION OF THE PROVISIONS OF SECTION 206(2) OF THEADVISERS ACT AND FAILED TO ADOPT AND IMPLEMENT WRITTENPOLICIES AND PROCEDURES REASONABLY DESIGNED TO IDENTIFY ANDTO ENSURE THE DISCLOSURE OF MATERIAL CONFLICTS OF INTERESTARISING FROM ITS REVENUE SHARING ARRANGEMENT WITH ITSCLEARING FIRM IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACTAND RULE 206(4)-7 THEREUNDER. THE FIRM DENIES THE SEC'SALLEGATIONS IN THE COMPLAINT AND BELIEVES THEY ARE WITHOUTMERIT.






THE SEC ALLEGES THAT THE FIRM, IN ITS ROLE AS A REGISTEREDINVESTMENT ADVISER FOR THE PERIOD JULY 2014 THROUGH DECEMBER2018, FAILED TO DISCLOSE MATERIAL CONFLICTS OF INTEREST RELATEDTO CERTAIN REVENUE SHARING ARRANGEMENTS WITH ITS CLEARINGFIRM IN VIOLATION OF THE PROVISIONS OF SECTION 206(2) OF THEADVISERS ACT AND FAILED TO ADOPT AND IMPLEMENT WRITTENPOLICIES AND PROCEDURES REASONABLY DESIGNED TO IDENTIFY ANDTO ENSURE THE DISCLOSURE OF MATERIAL CONFLICTS OF INTERESTARISING FROM ITS REVENUE SHARING ARRANGEMENT WITH ITSCLEARING FIRM IN VIOLATION OF SECTION 206(4) OF THE ADVISERS ACTAND RULE 206(4)-7 THEREUNDER. THE FIRM DENIES THE SEC'SALLEGATIONS IN THE COMPLAINT AND BELIEVES THEY ARE WITHOUTMERIT.






Arbitration Award - Award / Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 16


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

NASD

03/11/2003

03-01594

ACCOUNT RELATED-BREACH OF CONTRACT; DO NOT USE-NO OTHERCONTROVERSY INVOLVED

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; OTHER TYPES OFSECURITIES

$87,424.08

AWARD AGAINST PARTY

10/25/2004

$69,000.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

04/22/2003

03-02662

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES 70©2020 FINRA. All rights reserved. Report about COMMONWEALTH FINANCIAL NETWORK




www.finra.org/awardsonline

https://www.finra.org/arbitration-mediation/arbitration-awards-online?search=03-01594





Disposition:

Disposition Date:


DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; UNKNOWN TYPE OFSECURITIES

$172,801.00

AWARD AGAINST PARTY

07/13/2004

$40,000.00


Disclosure 3 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/02/2003

03-06812

ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-NEGLIGENCE; OTHER-UNDERWRITING

CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;OPTIONS

$1,200,000.00

AWARD AGAINST PARTY

08/18/2006

$269,873.17


Disclosure 4 of 16

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Arbitration Forum:

Allegations:

NASD

ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE







Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

04/20/2004

04-02854

COMMON STOCK; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE

$456,926.75

AWARD AGAINST PARTY

09/12/2006

$20,000.00


Disclosure 5 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/06/2004

04-03322

ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-NEGLIGENCE

ANNUITIES; COMMODITIES FUTURES; DO NOT USE-NO OTHER TYPE OFSEC INVOLVE; LIMITED PARTNERSHIPS

$2,023,985.00

AWARD AGAINST PARTY

04/12/2007

$314,028.00


Disclosure 6 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

10/24/2008

08-03874

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE

CORPORATE BONDS; DO NOT USE-NO OTHER TYPE OF SEC INVOLVE;UNKNOWN TYPE OF SECURITIES

$171,507.00

AWARD AGAINST PARTY

11/24/2009

$84,972.00


Disclosure 7 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

06/25/2010

10-02864

ACCOUNT ACTIVITY-MISREPRESENTATION

COMMON STOCK

$24,795.00

AWARD AGAINST PARTY

11/23/2010

$3,425.00


Disclosure 8 of 16

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Disclosure 8 of 16



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

03/12/2012

12-00812

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-MANIPULATION; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-EXCHANGES; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

ANNUITIES; MUTUAL FUNDS; VARIABLE ANNUITIES

$3,141,050.90

AWARD AGAINST PARTY

09/30/2013

$0.00


Disclosure 9 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



FINRA

10/23/2013

13-03014

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

CORPORATE BONDS; EXCHANGE-TRADED FUNDS; LIMITEDPARTNERSHIPS; MUTUAL FUNDS; REAL ESTATE INVESTMENT TRUST

$1,000,000.00









Disposition:

Disposition Date:


$1,000,000.00

AWARD AGAINST PARTY

11/10/2014

$580,375.01


Disclosure 10 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

11/13/2013

13-03041

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE

MUNICIPAL BOND FUNDS; MUNICIPAL BONDS

$4,894.45

AWARD AGAINST PARTY

08/08/2014

$4,631.51


Disclosure 11 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

FINRA

02/20/2014

14-00446

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT RELATED-FAILURE TO SUPERVISE








Case Number:



Disposition:

Disposition Date:


14-00446

$950,000.00

AWARD AGAINST PARTY

09/09/2015

$65,250.02


Disclosure 12 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

05/11/2017

17-01206

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-VIOLATE OF BLUE SKY LWS; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; MUTUAL FUNDS

$890,000.00

AWARD AGAINST PARTY

12/10/2018

$550,000.00


Disclosure 13 of 16

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Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-VIOLATE OF BLUE SKY LWS; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

05/15/2017

17-01207

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-FRAUD;ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-VIOLATE OF BLUE SKY LWS; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; MUTUAL FUNDS

$970,000.00

AWARD AGAINST PARTY

11/12/2018

$129,058.01


Disclosure 14 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/21/1993

93-03486

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS

$750,000.00

AWARD AGAINST PARTY

08/14/1995

$101,000.00


Disclosure 15 of 16

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Disclosure 15 of 16



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

02/03/1997

96-05848

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY; DO NOT USE-NO OTHER CONTROVERSY INVOLVED

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS;REAL ESTATE INVESTMENT TRUST

$2,400,000.00

AWARD AGAINST PARTY

09/20/1999

$50,000.00


Disclosure 16 of 16

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/24/1997

97-05040

ACCOUNT ACTIVITY-OTHER; DO NOT USE-NO OTHER CONTROVERSYINVOLVED

DO NOT USE-NO OTHER TYPE OF SEC INVOLVE; LIMITED PARTNERSHIPS;MUTUAL FUNDS

$360,000.00

AWARD AGAINST PARTY

10/01/1998

$10,000.00








Civil Bond

This type of disclosure event involves a civil bond for the brokerage firm that has been denied, paid, or revoked by abonding company.

Disclosure 1 of 1


Policy Holder: COMMONWEALTH FINANCIAL NETWORK

Bonding Company Name: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH

Disposition: Payout

Disposition Date: 05/15/2006

Payout Details: $1.25 MILLION ON 05/15/2006

Firm Statement COMMONWEALTH FILED A CLAIM SEEKING INDEMNITY ON ITS SECURITIESDEALER BLANKET BOND REGARDING POTENTIAL CLAIMS AGAINST THEFIRM AS A RESULT OF ACTIONS BY ITS FORMER REGISTEREDREPRESENTATIVE, BRADFORD C. BLEIDT. IN NOVEMBER 2004, THE FIRMBECAME AWARE THAT BLEIDT HAD ENGAGED IN A SCHEME TO DEFRAUDHIS CLIENTS. IN NOVEMBER 2004, BLEIDT SENT A TAPED CONFESSION TOTHE SEC AND OTHERS, ADMITTING TO HIS SCHEME, INCLUDING STEALINGAT LEAST $20 MILLION OVER A TWENTY YEAR PERIOD WHILE ASSOCIATEDWITH FOUR DIFFERENT BROKERAGE FIRMS, INCLUDINGCOMMONWEALTH, AND CLAIMING TO BE THE SOLE PARTICIPANT IN SAIDSCHEME. AS A RESULT, THE SEC FILED A CIVIL COMPLAINT AGAINSTBLEIDT, OBTAINED INJUNCTIVE RELIEF AND THE APPOINTMENT OF ARECEIVER FOR BLEIDT, AND HIS TWO SEC REGISTERED INVESTMENTADVISORS, ALLOCATION PLUS ASSET MANAGEMENT AND FINANCIALPROSPECTIVE PLANNING SERVICES. COMMONWEALTH DENIES ANYLIABILTY AS A RESULT OF BLEIDT'S ACTIONS AND BELIVES IT HAS VALIDDEFENSES TO EACH AND EVERY POTENTIAL CLAIM OF BLEIDT'SDEFRAUDED INVESTORS. NONETHELESS, TOGETHER WITH TWO OTHERBROKERAGE FIRMS, IT RESOLVED ALL CLAIMS BY A MONETARY PAYMENTTO A GLOBAL SETTLEMENT FUND ADMINISTERED BY THE RECEIVER FORTHE BLEIDT ENTITIES AND RECEIVED A RELEASE FROM THOSEPOTENTIALLY DEFRAUDED. AFTER MAKING SAID PAYMENT,COMMONWEALTH RECEIVED THE ABOVE PAYOUT IN COMPROMISE OF ITSFIDELITY BOND CLAIM.






End of Report

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