Cambridge Investment Research a securities broker dealer headquartered in Fairfield Iowa has been censured and fined $150,000.00 by Financial Industry Regulatory Authority (FINRA) based upon findings that (1) Cambridge failed to adequately supervise mutual fund and unit investment trust (UIT) trades (2) Cambridge neglected to create an adequate supervision system to identify and prevent its stockbrokers from charging customers excessive commissions and (3) Cambridge neglected to identify and process discounts for customers that were eligible to receive them. Letter of Acceptance Waiver and Consent No. 2017052543601 (Dec. 31, 2019).

According to the AWC, an automated trade surveillance system had been used by Cambridge in order to detect possible inappropriate and unsuitable switch transactions and short-term trading. The surveillance system was supposed to identify alerts in situations where problematic unit investment trust switches or mutual fund trades were executed, but this system of supervision was flawed because of there being inadequate guidance provided to supervisors regarding the appropriate action to take with alerts. FINRA stated that none of the transactions which created those alerts were rejected by the securities broker dealer. In fact, the AWC stated that at least one of Cambridge’s stockbrokers made unsuitable short-term trades of mutual funds because of Cambridge’s failed supervisory system.

The AWC stated that none of the other electronic systems used by Cambridge were set up to trigger alerts in cases of potentially unsuitable transactions not categorized as switches. This led to unsupervised and problematic short-term unit investment trust and mutual fund transactions. Also, FINRA stated that there were instances where supervisors neglected to follow up with stockbrokers who appeared on a pattern report used by the securities broker dealer for purposes of thwarting inappropriate transactions. Cambridge also neglected to adequately enforce procedures which were set up to notify customers about possible inappropriate transactions and charges. The securities broker dealer’s conduct was violative of FINRA Rules 2010 and 3110 as well as NASD Rule 3010.

FINRA also stated that the securities broker dealer neglected to adequately monitor trades for excessive commissions. The system used by the securities broker dealer was not compliant because of supervisors failing to review transactions unless there were additional red flags present. The AWC stated that customers were overcharged on thirty-one transactions. In one case, a $25,000.00 commission (later reversed) had been charged to a customer in error. The AWC stated that the securities broker dealer violated FINRA Rules 2010 and NASD Rule 3010 in this regard.

In addition, FINRA stated that from February 1, 2016 to January 31, 2017, there was no system of supervision established by Cambridge for purposes of ensuring that its customers obtained discounts on mutual fund purchases. The AWC stated that Cambridge failed to take into account, inter alia, breakpoint discount schedules and household accounts. FINRA indicated that Cambridge had a system in place to alert the company when discounts failed to be applied but the securities broker dealer could not show that supervisors routinely reviewed and followed up on the alerts. FINRA determined that from May 20, 2016 to May 19, 2017, there were two hundred seventy-four transactions in which excessive charges were applied. FINRA determined that Cambridge’s conduct was violative of Rules 2010 and 3110.

This is not the first time that Cambridge has been sanctioned by FINRA for overcharging customers. Specifically, the securities broker dealer was censured and fined $250,000.00 based upon findings that exchange and rollover discounts were not processed for customers’ unit investment trust transactions in situations where customers were eligible to receive them. FINRA found Cambridge’s conduct to constitute violations of FINRA Rules 2010 and NASD Rules 2110 and 3010.

The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.

Questions or comments regarding the source or accuracy of any information, including any subsequent developments, should be directed to:  [email protected]

This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer.

Guiliano Law Group, P.C.

Our practice is limited to the representation of investors. Over the last three decades, we have recovered more than a hundred million dollars for more than 1,000 injured investors from all over the United States and several foreign countries. We accept representation purely on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a confidential consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.

For more information concerning common claims against stockbrokers and investment professionals, please visit us at

To learn more about FINRA Securities Arbitration, and the legal process, please visit us at

Stockbroker Fraud. Securities Arbitration and Investment Fraud Lawyers.  
National Practice. Contingent Fee. Confidential Free Consultation.

 (877) SEC-ATTY

1700 Market Street, Suite 1005
Philadelphia, PA 19103
Direct: (215) 413-8223
Toll Free: (877) 732-2889

1260 South Soto Street, Suite 7
Los Angeles, California 90023
Direct: (213) 255-3475
Toll Free: (877) 732-2889

2750 NE 185th Street, Suite 302
Aventura, Florida 33180-2877
Direct: (786) 490-2413
Toll Free: (877) 732-2889

See Important Disclaimer


No comments yet.

Leave a Reply

Name (required)

Email (will not be published) (required)