Commonwealth Equity Services, LLC d/b/a Commonwealth Financial Network

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26508  / March 27, 2026

Securities and Exchange Commission v. Commonwealth Equity Services, LLC d/b/a Commonwealth Financial Network, No. 1:19-cv-11655 (D. Mass. filed Aug. 1, 2019)

SEC Obtains Final Consent Judgment as to Massachusetts Investment Adviser for Alleged Failure to Disclose Conflicts

On March 23, 2026, the U.S. District Court for the District of Massachusetts entered a final judgment by consent as to Commonwealth Equity Services, LLC d/b/a Commonwealth Financial Network, in connection with previously filed charges of violating the antifraud and compliance provisions of the Investment Advisers Act of 1940 and Rules thereunder.

According to the SEC’s complaint, filed on August 1, 2019, Commonwealth failed to disclose material conflicts of interest related to a revenue sharing agreement under which Commonwealth received payments from its clearing firm when Commonwealth invested client assets in certain classes of mutual funds.  Specifically, the SEC alleged that Commonwealth failed to tell its clients that: (i) in some instances mutual fund shares offered through a “no transaction fee” program offered by Commonwealth’s broker had at least one lower-cost share class that that clients could invest in for which Commonwealth received less or no revenue sharing; (ii) there were certain mutual fund investments that did not result in any revenue sharing payments to Commonwealth; and (iii) Commonwealth received revenue sharing payments on certain mutual fund investments for which Commonwealth’s broker charged a transaction fee.  Accordingly, the complaint alleged that Commonwealth breached its fiduciary duty to its advisory clients in violation of Section 206(2) of the Advisers Act and Commonwealth’s failure to adopt and to implement written policies and procedures reasonably designed to ensure that it identified and disclosed these conflicts of interest violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.

Without admitting or denying the SEC’s allegations, Commonwealth consented to the entry of the final judgment that orders Commonwealth to pay a civil penalty in the amount of $5 million.

The SEC’s litigation was conducted by Alfred A. Day and David H. London of the Boston Regional Office.  The SEC's investigation was conducted by staff in the Division of Enforcement’s Asset Management Unit in the SEC’s Denver, Boston and Washington, DC offices.