Tr?id=566623520170033&ev=PageView&noscript=1

ÍøÆØ³Ô¹Ï

Commonwealth Financial Network Faces Potential Damages Amid SEC Lawsuit

Posted on April 15th, 2024 at 1:37 PM
Commonwealth Financial Network Faces Potential Damages Amid SEC Lawsuit

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

Commonwealth Financial Network is under fire, as it faces potential damages amounting to $111.5 million from a Securities and Exchange Commission (SEC) complaint filed nearly five years ago. Despite anticipating a loss of up to $24 million, the investment advisory firm remains embroiled in an ongoing legal battle.

In 2019, the SEC initiated legal action against Commonwealth, alleging breaches of fiduciary duty related to a revenue-sharing program with its clearing firm. The SEC claimed that from July 2014 to December 2018, Commonwealth failed to disclose conflicts of interest to its advisory clients. As reported by ThinkAdvisor, the company purportedly neglected to inform clients about revenue discrepancies between different mutual fund share classes, thereby generating substantial revenue-sharing payments for the firm.

In April 2023, a district court ruled in favor of the SEC, finding Commonwealth in violation of the Advisers Act of 1940 for inadequate conflict disclosure and policy implementation. Commonwealth filed a motion for reconsideration in May of 2023, and the SEC countered with a motion for final judgment, seeking damages totaling $111.5 million. Commonwealth subsequently opposed the SEC's motion in July.

Despite the court's denial of Commonwealth's motion for reconsideration, the company maintains its stance that the SEC failed to establish a necessary causal connection and argues against disgorgement. In its financial report, Commonwealth estimates potential losses between $5 million and $24 million, with $5 million provisioned in accrued liabilities as of December 31, 2023.

The 2019 SEC action reflects a broader regulatory crackdown on firms' failure to disclose 12b-1 fees and revenue-sharing arrangements, resulting in fines for numerous entities.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

Jim, Stephany and the whole team were a God send.  ÍøÆØ³Ô¹Ï felt like we were put into a situation where we had no advocate. Jim’s team came in with a strong, well laid out strategy on how to get our story heard. Where our outside compliance company had no ability to help, our Broker Dealer was impenitent, and the regulators were aggressive pursuing vague rules, Jim came like a barricade against an assault we did not understand. Though you pay member dues to be affiliated with FINRA and a B/D, you have no voice. The only thing that is truly heard in this un-level playing field is a bulldog’s bark like Jim’s. I would encourage anyone to call Jim and his team to find a real ally in the tough and complicated world of securities regulation. They are truly the best.

Greg P.

LATEST NEWS AND ARTICLES

1778171646 Law
May 7, 2026
FINRA Bars Former Raymond James Broker for Refusing Testimony in Unauthorized Trading Probe

A former registered representative with Raymond James has been barred from the securities industry after refusing to cooperate with a Financial Industry Regulatory Authority (FINRA) investigation into alleged unauthorized trading activity.

1778084309 Law
May 6, 2026
FINRA Outlines Key Rulemaking Priorities and Recent Developments in Quarterly Agenda

The Financial Industry Regulatory Authority (FINRA) recently released its Quarterly Regulatory Policy Agenda, offering a detailed view of its rulemaking priorities, pending proposals, and recently approved regulatory changes.

1778000603 Law
May 5, 2026
Commonwealth Financial Network Resolves SEC Conflict of Interest Case

Commonwealth Financial Network has agreed to pay $5 million to resolve a long-standing conflict of interest case brought by the Securities and Exchange Commission, according to reporting by ThinkAdvisor.