Osaic Wealth: Regulatory Actions and Investor Information

Osaic Wealth has experienced an increase in disclosure events over recent years. Records show the firm currently has 86 disclosure events, including 48 regulatory actions and 31 arbitrations. This pattern of regulatory challenges has raised concerns among investors and industry watchdogs about the company’s compliance frameworks and investor protection measures.

The firm has faced regulatory scrutiny regarding compliance practices from multiple oversight bodies. Both the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have taken actions against Osaic Wealth through various penalties. In March 2024, FINRA issued a $150,000 fine related to cybersecurity measures that were deemed inadequate for protecting sensitive client information. In 2023, the firm received a $400,000 penalty connected to $3.8 million in employee misconduct, highlighting significant supervision challenges within the organization.

Additionally, the SEC imposed $100,000 fines on four Osaic advisers in September 2023 for rule violations related to custody requirements. These penalties indicate concerns about the company’s operational practices and internal controls. The frequency and nature of these regulatory actions suggest potential systemic issues that may warrant attention from current and prospective clients. For investors affected by these issues, options exist to recover funds through established regulatory and legal channels.

Haselkorn & Thibaut, P.A. offers consultations regarding potential claims against Osaic Wealth for investors who believe they may have been impacted by any misconduct or unsuitable investment recommendations.

Key Information

• Osaic Wealth has 86 disclosure events including 48 regulatory actions and 31 arbitrations, representing a notable regulatory history that prospective and current clients should be aware of when making investment decisions
• FINRA fined Osaic $150,000 on March 14, 2024 for cybersecurity concerns that potentially exposed client data to unauthorized access, highlighting technological vulnerabilities within the firm’s information systems
• The SEC imposed $100,000 fines on four Osaic advisers in September 2023 for custody rule violations between 2017 and 2022, demonstrating a pattern of compliance issues spanning multiple years and affecting multiple advisers within the organization
• Most investor complaints must go through FINRA arbitration rather than courts due to account agreement terms, which represents an alternative dispute resolution process with different procedural requirements than traditional litigation
• Investors have six years to file FINRA arbitration claims and should maintain records of all communications with their advisors, including emails, account statements, and notes from meetings to strengthen potential claims
• The firm’s history of regulatory actions spans multiple years and involves various business practices, suggesting potential systemic compliance challenges rather than isolated incidents

Understanding Osaic Wealth Disclosure Events

Osaic Wealth has faced various complaints from investors. These range from service issues to concerns about investment advice suitability and the appropriateness of investment recommendations for clients’ financial situations and objectives. Disclosure events provide important insight into a firm’s regulatory history and can serve as indicators of potential areas of concern for investors considering working with the firm.

Common Customer Concerns

Records indicate several patterns in complaints against Osaic Wealth. Some investors have reported issues with trading authorization, where transactions occurred without proper client approval or outside the scope of granted authority. These allegations, if substantiated, could indicate serious breaches of the broker-client relationship and violations of fundamental investment principles regarding client consent and authorization.

The firm has received penalties for issues related to customer record protection and cybersecurity measures. In today’s digital environment, these vulnerabilities can expose sensitive client information to unauthorized access and potentially lead to identity theft or financial fraud. There have been cases involving the sale of promissory notes to clients that weren’t properly approved through the firm’s compliance channels, circumventing important investor protection mechanisms designed to screen unsuitable products.

Reports also show concerns about options trading strategies that may not have aligned with certain clients’ risk profiles and financial objectives. Options trading inherently carries higher risk and complexity than traditional securities transactions, making proper suitability assessment particularly critical. When brokers recommend complex options strategies to clients without adequate risk tolerance or understanding of the products, significant financial losses can result.

Additional concerns have included allegations of excessive trading (churning) that may have been designed to generate commissions rather than serve client interests, misrepresentations regarding investment characteristics and risks, and inadequate disclosures of important fee structures or conflicts of interest that could impact investment performance.

Regulatory Challenges

Osaic Wealth has faced regulatory scrutiny from financial oversight bodies due to compliance concerns that span multiple aspects of their business operations. These regulatory actions provide important context for understanding the firm’s adherence to industry standards and rules designed to protect investors.

FINRA Actions

FINRA has taken several actions regarding Osaic Wealth:

• A $400,000 penalty was issued after employees misappropriated $3.8 million from clients, pointing to significant supervisory deficiencies that allowed substantial client losses to occur through internal misconduct
• A $350,000 penalty was imposed when the firm allegedly failed to properly supervise sales of Multi-Share Class Variable Annuities, complex products with varying fee structures that require careful suitability assessment and clear disclosure to clients
• A $35,000 fine was issued for disclosure omissions regarding missing financial filings for securities, indicating potential transparency issues in the firm’s communications with clients and regulators
• Most recently, on March 14, 2024, a $150,000 fine was imposed for cybersecurity vulnerabilities that potentially exposed client information to unauthorized access and created risk of data breaches

These actions by FINRA reflect a range of compliance concerns spanning supervisory systems, product sales practices, disclosure requirements, and technological safeguards. The pattern of repeated penalties suggests potential systemic issues rather than isolated incidents.

SEC Oversight

The Securities and Exchange Commission has also been involved with Osaic Wealth:

• Four Osaic advisers received $100,000 fines each in September 2023 for custody rule violations, a fundamental investor protection regulation that requires proper handling and verification of client assets
• These violations occurred from June 2017 through December 2022, indicating a long-term pattern of non-compliance spanning over five years rather than a temporary lapse
• Each adviser accepted a cease-and-desist order along with financial penalties, formally requiring them to discontinue the violative practices under threat of additional sanctions
• In 2020, the SEC imposed a $500,000 fine on Osaic regarding certain volatility-linked ETP investments that were deemed unsuitable for certain clients, particularly those with long-term investment horizons for whom these complex products were inappropriate

The SEC’s involvement indicates concerns at both the adviser and firm-wide levels, targeting issues with fundamental operational areas like custody of client assets and product suitability. The substantial financial penalties reflect the seriousness with which regulators viewed these violations.

Options for Affected Investors

Investors who believe they have been affected by misconduct have legal options available for pursuing potential recovery of financial losses. Understanding these options can help investors make informed decisions about how to proceed if they believe they’ve been impacted by improper practices.

Potential Legal Recourse

Investors can pursue claims against Osaic Wealth, though most cases must proceed through FINRA arbitration rather than traditional courts. This is typically due to arbitration clauses in account agreements that investors sign when establishing their accounts. These mandatory arbitration provisions are standard in the securities industry but create a different procedural framework than traditional litigation.

Haselkorn & Thibaut, P.A. offers consultations to assess potential claims related to investment concerns. Their attorneys specialize in securities arbitration and have experience representing investors in claims against brokerage firms. Initial consultations provide an opportunity to evaluate whether specific situations may warrant further legal action based on the unique facts and circumstances of each case.

FINRA arbitration often provides a more expedient process than court litigation and can result in financial recovery for clients who experienced investment losses. The arbitration process typically resolves more quickly than court cases, often concluding within 12-18 months from filing to decision. Arbitration awards are final and binding with limited grounds for appeal, providing closure more rapidly than the traditional court system with its multiple levels of potential appeals.

The arbitration process allows for recovery of various types of damages, including:

• Return of principal investment losses
• Market-adjusted damages (what the investment would have earned in suitable alternatives)
• Interest on lost funds
• In some cases, attorneys’ fees and costs
• Potential punitive damages in cases involving egregious misconduct

For claims involving widespread misconduct affecting numerous investors, class action litigation may sometimes be available as an alternative to individual arbitration, though this depends on the specific nature of the allegations and whether class action waivers exist in account agreements.

Steps for Financial Recovery

For those considering action, several steps may help strengthen potential claims and maximize recovery opportunities:

• Filing a FINRA arbitration claim (viable for disputes within the past six years) through the proper channels and with complete documentation to initiate the formal dispute resolution process
• Gathering account statements, communications, and other documentation that demonstrates the nature of the investment relationship, recommendations made, and resulting financial impact
• Securing copies of all account opening documents, investment objectives questionnaires, and risk tolerance assessments that establish the parameters of suitable investments for your specific situation
• Preserving email correspondence, text messages, and notes from phone conversations with your advisor that may provide evidence of recommendations made or concerns expressed
• Obtaining transaction histories showing the timing, frequency, and nature of all account activities that may demonstrate patterns of concerning behavior
• Calculating financial damages through a detailed analysis of actual losses compared to appropriate benchmark performance
• Checking SIPC coverage limits (protection covers up to $500,000 in securities and $250,000 in cash) which may provide a recovery avenue in cases involving firm insolvency
• Being aware that the SEC can order financial restitution separate from private actions through regulatory settlements that may create funds for harmed investors
• Consulting with securities attorneys who specialize in FINRA arbitration to evaluate claim strength and potential recovery amounts
• Considering potential tax implications of any recovery, as different types of damages may receive different tax treatment

Time limits apply strictly to these claims, so prompt action is advisable. FINRA rules generally impose a six-year eligibility period for arbitration claims, measured from the date of the events giving rise to the dispute. Documentation of all communications with investment professionals creates an important foundation for any recovery effort and should be preserved as soon as concerns arise about potential misconduct or unsuitable recommendations.

Preventative Measures

Investors can take several steps to protect their investments and minimize the risk of experiencing problems similar to those that have led to complaints against Osaic Wealth. Proactive measures can help identify potential issues before they result in significant financial harm.

Protective Strategies

• Maintain open communication with financial advisors, requesting regular updates and explanations for recommended strategies and transactions
• Ask detailed questions about any recommendations that seem misaligned with your goals or risk tolerance, including specific inquiries about fees, risks, and potential conflicts of interest
• Request clear explanations of investment products before investing, particularly for complex instruments like structured products, options, or alternative investments
• Document all interactions with investment professionals through written follow-ups summarizing verbal discussions and confirming your understanding of recommendations
• Review account statements regularly to identify any unusual activity, unauthorized transactions, or unexpected fees and charges
• Monitor account performance against appropriate benchmarks to assess whether your investments are meeting reasonable expectations given market conditions
• Verify that your risk profile and investment objectives on file with the firm accurately reflect your current financial situation and goals
• Conduct background checks on financial advisors using FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure database before establishing advisory relationships
• Request and review the firm’s Form ADV (for investment advisers) or relationship disclosure information to understand service offerings, fees, and potential conflicts
• Contact the broker-dealer’s compliance department with concerns about advisor conduct or unexplained account activities
• Consider seeking second opinions from independent financial professionals when evaluating complex investment strategies or products
• Diversify not only investments but also advisory relationships to avoid concentration of assets with a single firm or advisor
• Request detailed fee disclosures in writing before establishing accounts and regularly review all fees being charged
• Consider seeking professional advice from a securities attorney if serious issues arise or if you observe patterns of concerning behavior

These preventative measures can help investors protect themselves from problematic practices and create documentation that would support potential claims if issues do arise.

Value of Professional Support

Professional guidance can be valuable for investors facing issues with investment firms. Experienced attorneys can help identify potential violations and disclosure events that may not be obvious to individual investors without specialized knowledge of securities regulations and industry standards.

Securities attorneys bring specialized expertise to the evaluation of investment-related complaints, including:

• Knowledge of specific FINRA rules and securities regulations that may have been violated
• Experience interpreting complex account statements and trading records to identify problematic patterns
• Understanding of suitability standards and how they apply to different investment products and strategies
• Familiarity with industry practices and how they compare to the treatment a particular investor received
• Expertise calculating damages according to methodologies accepted in FINRA arbitration
• Strategic insight into the arbitration process including selection of arbitrators and presentation of evidence
• Access to expert witnesses who can testify about industry standards and proper practices
• Ability to negotiate settlements that may resolve claims without full arbitration proceedings

FINRA arbitration agreements often limit direct legal options, making professional guidance important for taking appropriate action. Since most brokerage firms require customers to agree to mandatory arbitration when opening accounts, understanding this specialized forum becomes essential when disputes arise.

Attorneys who specialize in securities arbitration can help navigate the significant procedural differences between arbitration and court litigation, including:

• Different evidentiary standards that apply in arbitration compared to court proceedings
• Limited discovery processes that require strategic approaches to document requests
• Condensed hearing schedules that require efficient presentation of complex financial information
• Specialized arbitrator selection procedures that can significantly impact case outcomes
• Understanding of how industry arbitrators (who comprise part of FINRA panels) view different types of claims

For complex claims involving multiple investments or sophisticated products, professional guidance can be particularly valuable in organizing evidence, identifying the strongest claims, and presenting information in the most compelling manner to arbitration panels.

Conclusion

Osaic Wealth’s disclosure events highlight the importance of investor vigilance in monitoring advisory relationships and investment accounts. FINRA and SEC actions against the firm relate to supervision practices and other regulatory concerns that may impact client account management and security of assets.

These regulatory actions span multiple years and touch on various aspects of the firm’s business, including cybersecurity protocols, custody procedures, supervision systems, and product sales practices. The pattern and frequency of these actions suggest potential systemic compliance challenges rather than isolated incidents, warranting heightened attention from current and prospective clients.

Investment protection requires awareness of potential warning signs that could indicate problematic practices. These signs may include unexplained account losses, unauthorized transactions, recommendations that seem inconsistent with stated investment objectives, excessive trading activity, or reluctance to provide clear explanations about investment strategies and associated fees. Monitoring accounts for these indicators can help investors identify potential issues before they lead to significant financial harm.

Taking prompt action through appropriate channels can help recover losses from unsuitable investments or unauthorized trading. The statutory and regulatory framework provides various avenues for investor protection, including direct complaints to firm compliance departments, regulatory complaints to FINRA or the SEC, and formal arbitration proceedings for financial recovery.

Many investors pursue resolution through arbitration rather than traditional lawsuits due to the mandatory arbitration provisions in most brokerage account agreements. While arbitration differs procedurally from court litigation, it can provide an effective forum for resolving investment-related disputes when approached with proper preparation and representation.

Protecting your investments requires ongoing attention to safeguard your financial resources. This includes regular review of account statements, verification of transaction accuracy, evaluation of performance against appropriate benchmarks, and assessment of whether investment recommendations remain suitable given your current financial situation and objectives.

Investors should verify investment professional credentials before establishing advisory relationships, question recommendations that seem unsuitable or unclear, and seek additional opinions from independent sources before committing funds to complex or high-risk investment strategies. These proactive measures can help prevent problems and position investors more favorably if disputes do arise.

The financial industry’s regulatory framework is designed to protect investors, but individual diligence remains an essential component of investment safety. By combining regulatory protections with personal vigilance and prompt action when concerns arise, investors can better protect their financial interests in the complex investment landscape.