Formed in 1995 by Eric Schwartz, Cambridge Investment Research (“Cambridge), Inc. is one of the largest independent broker-dealers in the United States. According to Financial Advisor magazine, in 2022 Cambridge was the ninth largest broker-dealer based on revenues, with $1.4B (as of December 31, 2022).
Headquartered in Fairfield, Iowa, the firm has 3,800+ producing financial advisors and $144B in assets under advisement (AUA). It’s holding company is Cambridge Investment Group, Inc. The firm serves all 50 states as well as the District of Columbia, Puerto Rico, and the Virgin Islands.
Financial Misconduct at Cambridge Investment Research
Cambridge is licensed by the Financial Industry Regulatory Authority (FINRA), and as such is legally obligated to ensure its brokers are acting lawfully in the interest of their investors. If a client suffers losses as a result of negligent behavior or misconduct from a broker, then the firm may be held legally responsible to repay the damages.
With 14 disclosure events (10 regulatory fines and four arbitrations), Cambridge has a long history of misconduct.
In August 2013, the Securities and Exchange Commission (SEC) found that Cambridge advisor, Richard Sandru, had misappropriated at least $308,850 in supposed “financial planning” fees from at least 47 clients by forging their signatures or adding unnecessary costs to their Financial Planning Engagement (FPE) agreements. Sandru also failed to provide the services that were agreed upon in those agreements.
If a broker makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment, they may also be liable for investment losses. Each investment must be suitable for the specific investor, taking into consideration the investor’s age, net worth, risk tolerance, experience, and financial needs.
Former Cambridge advisor, Brad C. Lawing had multiple complaints levied against him. In May, 2017, Lawing settled a claim with a client after he was alleged to have failed to inform them that selling their investments would cause significant capital gains. In November 2017 FINRA suspended Lawing for five months and required him to pay $11,754 in sanctions and restitution after (among other issues) he recommended shares of a business development company to three customers, two of whom did not satisfy the issuer’s suitability standards, while the third’s investment resulted in overconcentration. Lawing was found to have failed using reasonable diligence to make suitable recommendations.
In March 2021, FINRA fined Cambridge $3.1M+ for failing to conduct reasonable due diligence, supervise its representative’s recommendations of the Mutual Fund LIM Preservation & Growth Fund, and failed to establish a reasonably designed supervisor system to review fund recommendations.
In August 2021, the SEC sanctioned Cambridge $250,000 for failing to adopt written policies and procedures reasonably designed to protect customer records and information when cloud-based email services were used by some of its financial professionals, as is required by law.
While much of Cambridge’s misconduct stemmed from the failure to supervise its advisors, other types of misconduct included:
- Failure to adopt required policies and procedures
- Failure to conduct reasonable due diligence
- Failed to comply/follow procedure
- Breach of fiduciary duty
- Breach of contract
- Negligence
- Fraud
- Misrepresentation and omission of facts
Wondering If You Have a Claim? Contact Our Firm Now!
Meyer Wilson reclaimed $350 million for the victims of investment fraud or misconduct. Our attorneys are experienced in going up against large investment firms, and our track record affirms our resources and expertise. Meyer Wilson has represented clients nationwide and internationally, in state and federal courts, and in arbitration through FINRA and the American Arbitration Association (AAA). As an investor, you have a right to recover investments lost through unethical behavior or decisions made against your interests.
If you believe that you have been the victim of investment fraud or have been recommended unsuitable investments, you may have options. Call Meyer Wilson today!