The Financial Industry Regulatory Authority fined LPL Financial $10 million for what they deemed as “broad supervisory failures.” The firms infractions reportedly related to complex products which included the sales of non-traditional ETFs, certain variable annuities, and non-traded REITs. FINRA also found the firm failed to monitor and deliver to customers more that 14 million trade confirmations.
FINRA found, that over the course of multiple years, LPL failed to supervise the sales of certain complex products. According to FINRA, LPL did not have a system to monitor the length of time customers held ETFs in their accounts. Furthermore, FINRA found that the firm did not enforce limits on concentrations of those products or adequately train their registered representatives
on the risks of certain products.
According to FINRA, the surveillance system LPL used to review trading activity in customer abouts was “plagued by multiple deficiencies.” The system allegedly failed to generate alerts for high-risk activity such as employee front-running. Another automated system was also found to be “flawed,” and the anti-money laundering system failed to generate alerts on excessive ATM withdrawals.
In addition to the fine, LPL was ordered to pay $1.7 million to some customers who purchased certain ETFs. FINRA said LPL may have to pay additional compensation pending a review of its ETF systems and procedures.
The foregoing information, which is publicly available on FINRA’s website, has been provided by The White Law Group.
Brokerage firms have a supervisory responsibility to adequately monitor activity and transactions of their customer accounts. If a firm fails in their supervisory duty or violates state/federal securities law they may be liable for investment losses.
If you incurred investment losses on complex investment products purchased through LPL Financial, The White Law Group may be able to help. For a free consultation with a securities attorney, please call (312)238-9650.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, IL and Vero Beach, FL.
To learn more about the firm, visit www.WhiteSecuritiesLaw.com.