Osaic Wealth, Inc., or Osaic Wealth, (CRD#: 23131) has gone through regulatory challenges and customer complaints associated with their operations. Here, we will review Osaic Wealth, the legal considerations associated with them, and the protections available to investors. Investors who suspect misconduct from a brokerage firm such as Osaic Wealth should seek legal action to work toward the recovery of losses.
Understanding Osaic Wealth and Its Operations
What is Osaic Wealth, Inc.?
Osaic Wealth Inc. is a registered broker-dealer functioning as a full-service independent firm, offering a wide range of financial products and services to individual investors and financial advisors. Formerly known as Royal Alliance, Osaic Wealth has established itself as a player in the financial services industry. The company’s independent structure allows it to provide a variety of investment options and services, but this model also comes with unique challenges regarding oversight and regulation.
Who Owns Osaic Wealth, Inc.?
Osaic Wealth Inc., part of Osaic Holdings Inc, is owned by Advisor Group, a network of independent broker-dealers. Advisor Group acquired the firm to expand its reach in the financial services sector. Under the umbrella of Osaic Institutions, Inc. and Osaic Financial, Osaic Wealth, Inc. collaborates with various financial institutions to deliver investment services nationwide. An independent broker-dealer permits financial advisors to operate their own practices under the firm’s umbrella, often as independent contractors rather than employees.
For example, Osaic Wealth may have numerous advisors across the country who utilize the company’s services and branding but manage their own client relationships and offices. This decentralized structure can lead to challenges in ensuring consistent compliance and supervision, as each advisor operates with a degree of autonomy. This independence can complicate oversight, making it more challenging for the central firm to monitor advisors’ activities and enforce regulatory standards, potentially leading to inconsistencies in service quality or compliance adherence.
Regulatory Oversight and Compliance
As a registered broker-dealer, Osaic Wealth, Inc. is subject to regulatory oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These are the two primary federal regulators in the financial industry who oversee proper practices within firms like Osaic Wealth.
The framework managed by these regulators is designed to protect investors and uphold the integrity of financial markets. However, numerous regulatory issues and complaints with Osaic have raised concerns about their practices. The firm has faced approximately 46 state and self-regulatory body disclosure events, indicating that these regulatory bodies have initiated formal proceedings against it for violating investment-related rules or regulations. These incidents vary, and include:
- Failing to apply proper sales charge waivers—resulting in unnecessary fees for customers.
- Inadequate supervision of financial advisors.
For instance, FINRA investigated Osaic Wealth and found that the firm failed to apply sales charge waivers in about 41% of certain 529 plan rollover transactions, resulting in unnecessary charges to customers.
This pattern of complaints and regulatory problems suggests ongoing challenges in the firm’s compliance and supervisory practices, raising legitimate concerns about its ability to consistently act in its clients’ best interests.
We Have Recovered Over
$350 Million for Our Clients Nationwide.
Osaic Wealth Complaints and Regulatory Challenges
Common Complaints Against Osaic Wealth
Osaic Wealth has faced a significant number of customer complaints, as reflected in various Osaic Wealth, Inc. reviews, ranging from allegations of fraud and negligence to breaches of fiduciary duty. One common issue that has emerged is the misapplication of fees and sales charges. For example, in the case of the 529 plan rollover transactions mentioned earlier, approximately 500 accounts were affected, totaling about $7 million in rollover purchases and resulting in unnecessary sales charges and fees of around $235,000. This type of complaint highlights a systemic issue within the firm’s fee structure and application processes.
Another recurring theme in Osaic Wealth complaints is the unsuitable recommendation of investment products, particularly complex financial instruments like Volatility-Linked Exchange Traded Products (ETPs). Volatility-Linked ETPs are investment products designed to track market volatility—essentially, they attempt to profit from fluctuations in market prices. For example, they might track the VIX Index, often called the “fear index,” which measures expected volatility in the stock market. While these products promise to offer high returns, they are highly complex and carry significant risks, making them generally unsuitable for average investors seeking stable growth.
The SEC has taken action against Osaic Wealth for failing to implement adequate policies to prevent unsuitable ETP investments. This indicates a pattern of recommending products that may not align with clients’ risk profiles or investment objectives. This is despite the fact that financial advisors are legally required to act in their clients’ best interests.
Regulatory Action Taken Against Osaic Wealth
Osaic Wealth has faced numerous specific regulatory actions that highlight the firm’s ongoing compliance challenges. In 2020, the SEC initiated cease-and-desist proceedings against the firm for failing to adopt and implement policies designed to prevent unsuitable investments in Volatility-Linked Exchange Traded Products (ETPs). This action resulted in a $500,000 fine, underscoring the severity of the firm’s oversight failures.
Another significant regulatory action involved FINRA’s investigation into the theft of $3.8 million from Osaic Wealth customers. The investigation found that the firm had ignored red flags indicating potential misconduct, leading to:
- A censure
- A $400,000 fine; and
- An order to compensate affected customers.
These actions demonstrate a pattern of supervisory lapses and highlight the potential risks to investors when financial firms fail to maintain robust compliance and oversight mechanisms.
This incident not only impacted Osaic Wealth but also raised concerns across the broader network of Osaic Institutions, highlighting systemic issues within the organization. For instance, the failure to detect and prevent employee theft suggests significant gaps in Osaic Wealth’s internal controls and customer protection measures. These regulatory actions emphasize the necessity for financial firms to maintain strong compliance and customer protection practices.
Legal Recourse and Investor Protections
Can You Sue Osaic Wealth?
Investors who have suffered losses due to misconduct by Osaic Wealth or its employees can hold the firm legally responsible. Many financial services agreements include arbitration clauses requiring disputes to be resolved through FINRA arbitration proceedings rather than in court. An arbitration clause is a part of a contract where the parties agree to resolve any disputes through arbitration instead of traditional court litigation.
This means that if an investor has a dispute with their broker or investment firm, they must present their case to a panel of arbitrators rather than a judge or jury. The Financial Industry Regulatory Authority (FINRA) is one of several agencies that regulate the arbitration process for the securities industry. Others include AAA and JAMS, which both have unique arbitration processes associated with them. While FINRA arbitration is generally quicker and less formal than court proceedings, it can limit certain rights, such as the ability to appeal.
It’s important to note that, although arbitration can be more streamlined than court litigation, it still requires careful preparation and presentation of evidence. An experienced attorney familiar with FINRA arbitration procedures can be invaluable in navigating this process and maximizing the chances of a favorable outcome.
Seeking Financial Recovery with Legal Support
For investors who have suffered losses due to misconduct by Osaic Wealth or its financial advisors, seeking legal support is often essential for successful financial recovery. The process of recovering investment losses can be complex, involving detailed analysis of financial records, understanding securities laws, and navigating FINRA arbitration procedures.
They gather evidence of the advisor’s misconduct and present a compelling case to the arbitration panel or courtroom. Additionally, a knowledgeable attorney can help determine the full extent of recoverable damages, which may include not only direct investment losses but also potential lost opportunities and, in some cases, punitive damages. The attorney can handle all communications with Osaic Wealth and its legal representatives, ensuring that the investor’s rights are protected throughout the process. If you’re considering legal action, reach out to Meyer Wilson to explore how we can support you.
Our lawyers are nationwide leaders in investment fraud cases.
Meyer Wilson’s Role in Your Recovery
The regulatory issues and complaints against Osaic Wealth show the need for accountability in the financial industry. While Osaic Wealth offers a range of financial services, its history of regulatory problems and customer complaints raises significant concerns about its practices and oversight. If you have experienced misconduct or losses due to Osaic Wealth’s practices, Meyer Wilson is here to help you understand your rights and options for recourse. The complexities of the financial industry and the potential for substantial losses highlight the value of seeking professional legal advice when facing investment-related disputes or losses.
Recovering Losses Caused by Investment Misconduct.
