May 4, 2017 Comments (0) Current Investigations

More Trouble for LPL Financial due to Nontraded REIT sales

LPL Financial
(Last Updated On: May 4, 2017)

LPL may have to refund $8 Million for sales of nontraded REITs

According to Investment News, LPL Financial could end up refunding $8 million to clients for sales of nontraded real estate investment trusts (REITs).

LPL and New Hampshire Bureau of Securities reached a settlement in December 2015 due to a complaint from a retiree that suffered significant losses after purchasing several non-traded REITs through LPL, according to a statement from the NH securities bureau.

As part of the settlement, LPL paid a $750,000 fine and offered to pay remediation to any New Hampshire client who was sold a nontraded REIT since 2007 if the sale exceeded LPL’s own guidelines or product specific restrictions. In addition, LPL was required to hire a third-party to review LPL nontraded REIT sales to determine whether they violated those guidelines.

According to Investment News, the third-party recently completed its review and determined that over 200 New Hampshire residents are eligible for remediation of about $8 million, or an average of about $40,000 per client. The $8 million figure represents the total purchase price of the shares of nontraded REITs that were bought by the customers. Clients who still own those shares would have to tender them back to LPL to receive their portion of the settlement.

According to New Hampshire Bureau of Securities, individuals eligible for the remediation will receive letters outlining the offer being made to them by LPL.

LPL Financial Compliance Issues

There have been numerous compliance issues at LPL Financial over the past few years.  Massachusetts regulators ordered LPL to pay up to $3.7 million in client restitution and fines earlier this year after an investigation into sales of unsuitable variable annuities. In 2014 and 2015, LPL paid more than $70 million in regulatory fines and restitution to clients for widespread supervisory failures.

LPL has been in trouble for non-traded REIT sales more than once. The company reached a settlement with state regulators, agreeing to pay a $1.43 million fine and return money to clients for inappropriate sales of nontraded REITs, in December 2015.

The foregoing information is publicly available and is provided by The White Law Group.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  For a free consultation with one of the firm’s securities attorneys, please call (888) 637-5510.

For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.