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LPL Financial – More Fines

lpl-financialLPL Financial was fined $250,000 by a state regulator because its failed to establish, maintain, or enforce adequate procedures to review senior-specific titles for compliance with the states senior designations.  (2015-0033) The use of titles that convey confidence or expert qualifications, when there is little or no actual certification to the title, is inherently misleading and a misrepresentation.
LPL Financial was fined and ordered to pay $5,720,000 to customers who paid an initial front-end sales charge on their mutual fund purchases, when a class without those charges was available.  (July 2015 2014045270901).  This is part of the continuing, industry wide issues with customers deserving to get the best prices on purchases, but not.  Too many times, the customers are overcharged what would have been available to them, had there been just additional attention and training to the stockbrokers, for the well-being of the customers.
LPL Financial was fined and ordered to pay $10,000,000 for supervision failures.  LPL Financial filed to enforce its supervisory procedures for the sales of complex non-traditional Exchange Traded Funds (ETF’s).  LPL Financial  also failed to monitor and report trades and deliver to customers more than 14 million trade confirmations.  For ETFs, LPL Financial  did not have a system to monitor the length of time that customers held these securities in their accounts, or to enforce its limits on the concentration of ETFs in customer accounts.  LPL failed to ensure that all of its stockbrokers were trained on the risk of ETFs.  LPL Financial also failed to supervise its sale of variable annuities, in some times permitting sales without disclosing surrender fees and costs, in connection with some switch transactions.  Its surveillance system excluded these trades from supervisory review.  LPL Financial also failed to supervise non-traded REITS by failing to identify accounts eligible for volume sales charge discounts.  LPL Financial failed to review low priced equity trades, concentrated positions, actively traded accounts, and potential front running by employees.  LPL Financial failed to report accurate timely information for large option positions, as required by securities regulations.    (May, 2015 2013035109701)
LPL Financial was fined $2,000,000 and ordered to pay restitution of $819,000 in Illinois on variable annuities.  LPL Financial failed to maintain required documents when variable annuities were sold again into new variable annuities, as an exchange.  Variable annuity come in several classes determined by front-end and back-end fees and contingent deferred sales charges.  Many customers, we have seen, don’t understand that to sell out of a variable annuity and go to another kind of investment may incur significant charges if there is a contingent deferred sales charge.  Those charges are usually very high soon after the variable annuity is purchased, and decline year by year until generally fading out seven years after purchase (depending on the variable annuity).  When a stockbroker recommends selling out of one variable annuity to purchase another variable annuity, customers can be at risk of a new high contingent deferred sales charge.  Of course, the broker and firm make new commissions and fees when the new variable annuity is purchased.  This particular matter involved broker James J. McAtee in Mount Zion, Illinois but the risk to customers and requirements of a stockbrokerage firm are clear and in every state.   (June, 2014 1200385).
LPL Financial was fined $950,000 for failing to properly supervise and document the recommendation of purchase of REITS, oil and gas partnerships, and other investments outside of typical stocks and bonds.  LPL Financial was to have several phases of review for these types of investments for customers, but each phase of review was lacking.  LPL Financial had lacking supervisory system, did not fully review each of the transactions, did not comply with all state suitability standards, improperly defined liquid net worth, and did not account for charges on early withdrawal from retirement accounts.  LPL Financial did not conduct a full and proper suitability consideration before recommending these products.  (March, 2014 2011027170901).
LPL Financial was fined $7,500,000 for permitting brokers to send millions of emails without proper supervision and failing to properly archive emails.  LPL Financial literally did not review millions of emails that brokers sent out as dba’s and thereby evaded LPL’s supervision and archival system.  LPL Financial failed to detect the problems, and once it did, LPL Financial was very slow to work to correct the problem.  Millions and millions of emails were lost or the copies were corrupted and unreadable.  (May 2013 2012032218001).  The amount of the fine indicates the seriousness of the violations.  Even more than LPL Financial’s failures to review the emails and save them, emails of this type are likely to be the most dangerous type of solicitations for investments that have no suitability consideration for the investors.  This is likely massive marketing for LPL Financial brokers, but without any customer protections.
LPL Financial was fined $400,000 for failing to provide mutual fund customers with a prospectus. After millions of mutual fund transactions, the LPL Financial brokers were required by LPL to give a prospectus to the customer and to have the customer sign a receipt for the prospectus.  But this did not happen, millions of times.  LPL failed to have sufficient supervisory procedures in place.  LPL Financial knew it had inadequate supervision but did not correct its systems until after an excessive delay.  (December 2012 2011029101501)
LPL Financial was fined $500,000 by a state regulator for failing to properly supervise and train stockbrokers in connection with their sales of non-traded REITs (Real Estate Investment Trusts).  (December 2012 2012-0036).   The recommendations of REITs has received a lot of attention from regulators–long after the sales were made.  REITs are no well understood by investors at all.  Many times, investors looking for conservative growth are sold on the large commercial properties that are the subject of REITs but fail to receive a full understanding of the REIT investment itself.  That it is illiquid at times, that it is highly concentrated not only in real estate but sometimes a limited number of properties, and that the brokers are paid an increased commission to sell it.
LPL Financial was fined $100,000 for failing to effectively supervise a branch manager, in Oregon, by the state securities department.  The branch manager is the firm’s supervisor who is required to be sure that the stockbrokers in the branch follow all rules and regulations.  But this branch manager sold general partnerships to senior citizens for whom the partnerships were not suitable.    (November, 2011 S-0700001-2).   Many customers have been impressed by being a customer of the branch manager.  But the management of the managers–the branch managers-sometimes creates a situation at a firm where there is inadequate supervision of the branch manager.  This has been a challenge for a number of firms, including LPL.  Because there is a supervision challenge, it is not surprising that here LPL had problems supervising a branch manager.
LPL Financial was fined $100,000 for failing to properly supervise its stockbrokers, especially in the daily required review of the stockbroker’s emails.  LPL Financial used a computer tool that did not review all of the emails, but only a portion.  Millions of emails were not reviewed.  Even emails that were reviewed, and were red flagged for further attention, did not get actual, human review, as required by the supervision system.  (January 2011 2009016570001).  The very core of supervision includes a stockbrokerage firm’s obligation to monitor and know what its stockbrokers are saying to customers, about investment recommendations.  In the modern world, when a stockbroker uses email to communicate with customers, a review of those emails is particularly important and required.  LPL Financial and other firms have had compliance issues reviewing and storing all the emails, which chips away at their fundamental compliance effectiveness, and which can be really harmful to customers.
LPL Financial was fined $175,000 for failing to properly supervise variable annuity exchanges at the firm.  LPL Financial had inadequate systems and procedures for supervising variable annuity exchanges.  LPL Financial has a duty to properly supervise its brokers, especially when variable annuities are being exchanged for a new purchased variable annuity.  The new purchase generates large commissions for the stockbroker.  Unless the customer is carefully protected, the customer can wind up with the wrong class of variable annuities, and even face large charges if the customer again switches or needs to pull money out of the account before seven years have passed.  (2009017682701).   Variable annuity exchanges always raise questions, and we are happy to review any circumstances including the exchange of variable annuities.
LPL Financial was fined $230,000 for failing to properly supervise its stockbroker in Pennsylvania.  (2007-03-01).  The failure to properly supervise its brokers is often the basis of causing significant account losses that would otherwise be avoidable.
These brokers have significant discipline or regulatory records.  StockBrokerLawyer.com seeks to review the accounts of any customers with losses of these brokers because of the heightened concerns.

If you have losses in your account with LPL Financial as your financial advisor, call (888) 986-7199 or write the investment recovery lawyers at StockBrokerLawyer.com for a free no-cost consultation. We can help recover your losses and seek other damages, too.

You can use the email form or chat on StockBrokerLawyer.com You may be entitled to recover your losses. We work on contingency: we are paid only when you are paid. Time is limited; delay is the favorite defense of the brokerage firms. Call 888-986-7199 now to speak to an attorney for a no cost evaluation.


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