Core Viewpoint - Cetera will pay $1.1 million to settle FINRA charges related to inadequate anti-money laundering (AML) oversight, which failed to identify suspicious transactions that required further investigation [1]. Group 1: Settlement Details - The FINRA settlement addresses issues from March 2019 to August 2021, focusing on Cetera's supervisory systems and written supervisory procedures [2]. - The settlement involves three subsidiaries of Cetera: Cetera Advisors, Cetera Wealth Services, and Cetera Investment Services [2]. Group 2: Regulatory Compliance - FINRA rules require each registrant to develop written AML programs in compliance with the Bank Secrecy Act, and broker-dealers must file suspicious transaction reports under certain circumstances [3]. Group 3: Transaction Oversight Failures - From 2019, Cetera did not implement adequate policies to detect and report suspicious transactions involving low-priced securities, also known as microcap or penny stocks, which are volatile and trade in low volumes [4]. - During the specified period, Cetera customers sold approximately 800 million shares of penny stocks, contributing less than 0.1% to the firm's total revenue [4]. Group 4: Review Procedures - Until December 2019, Cetera only required monthly reviews without providing guidance on identifying potential red flags in low-priced securities transactions [5]. - After December 2019, Cetera Wealth Services initiated daily reviews, but these reports lacked historical data and were deemed ineffective by FINRA for detecting suspicious activity [6]. Group 5: Specific Case of Oversight - In one instance, three customers opened accounts, deposited over 100 million shares of a low-priced security, and began liquidating them, generating proceeds of about $375,000 [6]. - These customers accounted for up to 88% of the daily market volume, with one customer selling 10 million shares shortly after a promotional campaign for the issuer [7]. - Cetera's supervisory procedures were also inadequate in detecting potential Securities Act violations related to the offer or sale of unregistered securities [7].

Core Insights - The pace of new investors entering the market has significantly declined over recent years, as indicated by a new analysis from the Financial Industry Regulatory Authority [1] Investor Trends - In 2024, only 8% of investors reported starting to invest within the last two years, a sharp decrease from 21% in 2021 [2] - The survey included 2,861 U.S. respondents with non-retirement investment accounts, highlighting challenges faced by younger investors in terms of investing knowledge and risk assessment [3] Demographic Changes - Tracking investors from 2021 to 2024 showed a median age increase from 31 to 38 for those with less than two years of experience, suggesting that many younger adults who began investing during the pandemic have exited the market [4] Investment Preferences - Individual stocks remain the most common investment in non-retirement accounts, followed by mutual funds, but the growth in ETF ownership has stalled between 2021 and 2024 after a 10% increase from 2015 to 2021 [5] - The ownership of penny stocks, REITs, private placements, or structured notes has slightly declined, returning to levels last seen in 2018 [6] Risk Appetite - The percentage of investors willing to take average risks for average returns remained stable at 48%, while those willing to take substantial risks for significant returns dropped by 4% [7] - Among investors under 35, the willingness to take substantial risks decreased from 24% to 15%, although 62% still believe that taking considerable risks is necessary [8]