Cambridge Expects $500,000 Fine for Promised Fee Waiver Failures

Cambridge Investment Research Inc. anticipates paying $500,000 in restitution for failing to process fee waivers, according to information it disclosed in a regulatory filing.

According to the firm’s Form X-17A-5 filing from December 31, 2023, accepted by the Securities and Exchange Commission on February 27, the examinations staff at the Financial Industry Regulatory Authority is examining Cambridge’s policies and procedures concerning rights of re-installment. A right of re-installment is a transaction fee waiver for a customer who redeems an asset and then reinvests the proceeds within a set time frame.

According to the filing, Cambridge elected to offer the waiver, but these waivers “were not honored.”

“FINRA continues to review this matter, and the Company expects that FINRA’s review period will extend further than contemplated by the Company, resulting in an additional restitution payment in the amount of approximately $500,000 in 2024,” the filing stated.

FINRA has not yet announced that it has imposed such a payment. The disclosure did not say if Cambridge expects additional civil penalties to be added to the $500,000 restitution or what other actions FINRA might require Cambridge to take.

Cambridge declined to comment.

In February, the firm was fined $10 million by the SEC for “widespread recordkeeping failures.” It was among five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers charged with failures to maintain and preserve electronic communications. Cambridge and the other firms admitted to the facts in their respective SEC orders, agreed to pay combined civil penalties of more than $81 million, and have begun implementing improvements to their compliance policies and procedures to address the violations.