LPL Financial

LPL Financial Holdings (Nasdaq: LPLA) was established in 1989 in a merger between broker-dealers Linsco and Private Ledger. With over 17,500 financial advisors, more than $1 trillion in brokerage and advisory assets, and making about $5.9B in yearly revenue during the 2020 fiscal year, LPL Financial is the largest independent brokerage firm in the United States.

In 2021, LPL Financial was included on the Fortune 500 List of companies for the first time at #466. Its subsidiaries include LPL Financial, LLC, Fortigent, LLC, LPL Insurance Associates, Inc., and the Private Trust Company, NA.

Headquartered in San Diego, CA, LPL Financial has main offices in Boston, Austin, and Fort Mill, SC. However, unlike large-name broker-dealers, LPL is an independent brokerage firm that works with financial advisors who want greater autonomy but need back-office support.

These registered representatives will usually have their own one-person offices in strip malls or small office parks. Sometimes the LPL broker will have one or two junior financial advisors working for them. This type of setup can make it challenging for LPL Financial to properly supervise all of its registered representatives.

Below are several examples of LPL Financial’s recent acquisitions that have aided in the firm’s expansion:

• Wadell & Reed Financial’s wealth management business in April 2021.
• Chicago-based Fintech firm Blaze Portfolio in October 2020.
• Brokerage firm Lucia Securities in August 2020.
• Broker-dealer and registered investment advisor E.K. Riley Investments in August 2020.
• FinTech company AdvisoryWorld in December 2018.
• National Planning Holding’s independent broker-dealer network in August 2017.
• Pacific Life Insurance Co. broker-dealers —Mutual Service Corporation, Waterstone Financial Group, and Associated Financial Group — in early 2007.

Over the years, LPL Financial and its financial advisors have been named in many regulatory and FINRA arbitration claims by customers. Many of these customers have suffered losses because of unsuitable investment recommendations, misrepresentations, and other kinds of broker misconduct or negligence.

According to InvestmentNews, just in 2014 and 2015, LPL paid fines and customer restitution of over $70M.

Here are examples of a few of the more recent and relevant regulatory events that LPL Financial has been named in:

For anti-money laundering failures that were seen as a cause of violations by unregistered investment advisor, Eugenio García-Jiménez Jr., LPL Financial agreed to pay more than $4.1M plus interest.

The firm also paid a $750K civil penalty for investor losses to Mayagüez Economic Development Inc. (MEDI), which is the corporation of the municipality of Mayagüez, Puerto Rico. The civil case was brought by the US Securities and Exchange Commission (SEC).

FINRA fined LPL Financial $6.5M over various supervisory deficiencies, including those involving recordkeeping, fingerprinting non-registered employees, and advisors’ consolidated reports.

The self-regulatory organization (SRO) found that the firm’s weak supervision of consolidated reports enabled one ex-broker to run a $1M Ponzi scam that harmed customers.

LPL announced that as part of the SEC’s share class initiative, the firm would pay $8.1M plus $1.2M in interest to investors who were charged 12b-1 fees in its Strategic Asset Management (SAM) program

LPL Financial was fined $2.75M by FINRA for not listing dozens of customer complaints that had been brought against its brokers. It also failed to submit hundreds of suspicious activity reports (SARs) related to its anti-money laundering program.

LPL agreed to a $26M settlement for purportedly unregistered securities sales. The regulatory case was led by a North American Securities Administrators Association (NASAA) task force and involved multiple US states.

Another fine over supervisory violations, this one involved LPL’s sale of non-traded real estate investment trusts (non-traded REITs). The independent brokerage firm not only paid a $1.43M fine, but also it consented to pay back investors who were harmed. This settlement also stemmed from a multistate probe by NASAA.

Massachusetts’ securities regulator and LPL Financial arrived at a $2.5M agreement that included fines and restitution over non-traded REIT sales to investors in the state.

If you lost money working with an LPL financial advisor, please reach out to us at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com).

We have experience working with investors who have improperly suffered losses because of LPL Financial. This firm’s brokers, who are generally unsupervised in person, have been known to take advantage of unwitting clientele.

Call our seasoned broker misconduct attorneys at (800) 259-9010 or contact us online.