FINRA Sanctions LPL for Complaint Reporting Violations and AML Program Failures
According to the Financial Industry Regulatory Authority (FINRA) this week, the regulator has fined LPL Financial LLC $2.75 million for complaint-reporting and anti-money laundering program failures over a three year period.
FINRA’s findings state that LPL failed to file or amend registered representatives’ Forms U4 or U5 to disclose dozens of reportable customer complaints. FINRA alleges that the broker-dealer incorrectly construed that it was not required to report any complaint that did not expressly request compensation, even when the customer alleged a sales practice violation that caused a loss of $5,000 or more, and the complaint made clear that the customer was seeking compensation.
According to FINRA, the firm failed to investigate numerous attempts to gain unauthorized access to electronic systems that should have resulted in the filing of suspicious activity reports.
FINRA claims that LPL failed to file more than 400 suspicious activity reports. Its AML employees reportedly lacked the guidance necessary concerning investigation and reporting requirements when third parties used electronic means to attempt to compromise a customer’s email or brokerage account.
This is not the first time FINRA has fined LPL of for these types of infractions. In April 2015, FINRA fined the broker- dealer $10 million and ordered close to $1.7 million in restitution payments to customers after its automated anti-money laundering surveillance system failed to generate alerts about excessive withdrawals from automated teller machines.
LPL neither admitted nor denied the charges, but consented to the entry of FINRA’s findings, in order to settle the matter.
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The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group.
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