ADMINISTRATIVE PROCEEDING

File No. 3-21760

September 28, 2023 – The Securities and Exchange Commission today announced settled charges against four investment advisers owned by Osaic, Inc., formerly known as Advisor Group, Inc. (the “Advisers”):  FSC Securities Corporation, Osaic Wealth, Inc. (formerly known as Royal Alliance Associates), SagePoint Financial, Inc., and Woodbury Financial Services.  The Advisers failed to obtain verification by an independent public accountant of client funds and securities of which they had custody by virtue of a provision in agreements among the Advisers, their clients, and a clearing firm.

According to the SEC’s orders, from June 2017 to December 2022, each Adviser used a form agreement to govern certain aspects of the relationship among the Adviser, its clients, and a particular clearing agent the Adviser used.  As set forth in the orders, these agreements each included a margin account agreement that contained language, required by this clearing agent, that permitted the clearing agent to accept, without inquiry or investigation, any instructions given by the Adviser concerning these clients’ accounts.  The orders find that, as a consequence of the Advisers having this authority with respect to the client funds and securities in these accounts, the Advisers had custody of these assets.  The orders further find that, because the Advisers failed to obtain verification by actual examination of the client funds and securities in these accounts by an independent public accountant, the Advisers violated Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “custody rule.”

Each of the Advisers consented to the entry of an SEC order finding that the firm willfully violated the custody rule.  Without admitting or denying the findings, each of the Advisers agreed to a cease-and-desist order, a censure, and a $100,000 civil penalty to settle the charges.

The SEC’s investigation was conducted by Craig Welter  and was supervised by Lee A. Greenwood, Andrew Dean, and Corey Schuster, all of the Division of Enforcement’s Asset Management Unit.  The examination that led to Enforcement’s investigation was conducted by Arjuman Sultana, Michael Qualter, Lev Miller, Margaret Pottanat, Haresh Mehta, and Merryl Hoffman of the Division of Examinations.