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LPL Financial: 200+ Customer and Regulatory Complaints

LPL FinancialPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on April 2, 2019 indicate that Massachusetts-based broker-dealer firm LPL Financial has received more than 200 complaints from customers and regulatory authorities. Fitapelli Kurta is interested in hearing from investors who have complaints regarding LPL Financial (CRD# 6413).

Established in California in 2010, LPL Financial is headquartered in Boston, Massachusetts and registered with 53 US states and territories. According to its BrokerCheck report, it has received 153 regulatory sanctions and 54 customer complaints that evolved into arbitration.

In March 2019 the SEC sanctioned LPL Financial in connection to allegations it breached its fiduciary duty and provided inadequate disclosures regarding its mutual fund share class selection, and specifically that on occasion it recommended customers invest in certain mutual fund share classes when they were eligible for lower-cost share classes. The firm was censured and ordered to pay disgorgement exceeding $8 million.

In March 2019 the State of Washington sanctioned the firm in connection with a multi-state investigation that found LPL Financial “offered and sold unregistered, non-exempt securities” in violation of securities regulations, failed to reasonably supervise its agents, and failed to properly maintain books and records. The firm was issued a fine of $499,000 and agreed to make remediation with affected customers.

In February 2018 FINRA sanctioned LPL Financial in connection to allegations it failed to implement a supervisory system that was reasonably designed to ensure its representatives were properly trained about the material risks and featured of brokered certificates of deposit, and that the firm properly disclosed all material risks and features of the products to its customers. In connection with these allegations, LPL Financial was censured and issued a fine of $375,000.

In 2018 the Mississippi Securities Division sanctioned the firm in connection to allegations that certain non-traded REITs and non-traded business development companies “were inaccurately classified as equities” in some customer account statements. The firm was issued a fine of $40,000.

In 2018 FINRA sanctioned the firm in connection to allegations it failed to establish and implement an automated anti-money laundering program adequately designed to identify and cause reports of “potentially suspicious activity,” and that consequently the firm did not investigate a number of “attempts to gain unauthorized access to electronic systems and potential illegal activity carried out by electronic systems.” The firm was censured and issued a firm of $2,750,000.

In 2018 the State of Utah sanctioned the firm in connection to allegations it participated in “dishonest or unethical practices” and failed in its supervisory duties. The firm was censured and ordered to pay a fine of $200,000.

In 2017 the New Jersey Bureau of Securities sanctioned LPL Financial in connection to allegations it failed to ensure clients investing in alternative investments “satisfied the New Jersey prospectus suitability requirements” as well as its own alternative investment guidelines. The firm was issued a fine of $950,000.

In 2017 a customer alleged LPL Financial breached its fiduciary duty, misrepresented material facts, made unsuitable investment recommendations, failed in its supervisory duties, and acted negligently in connection to investments in common stock, exchange-traded funds, and other types of securities. The complaint resulted in an award to the customer of $25,000.

In 2016 FINRA sanctioned the firm in connection to allegations it failed to maintain more than 18.3 million electronic communications in a “write once, read many,” or non-erasable and non-rewritable format intended to prevent the alteration or destruction of electronic records. The firm was censured and issued a fine of $750,000.

In 2015 a customer alleged LPL Financial breached its fiduciary duty, misrepresented material facts, recommended unsuitable investments, breached contract, and acted negligently. The complaint resulted in an award to the customer of $725,000.

In 2015 a customer alleged LPL Financial breached its fiduciary duty, committed fraud, made misrepresentations of material facts, breached contract, acted negligently, and failed in its supervisory duties. The complaint resulted in an award to the customer of more than $462,000.

In 2015 the New Hampshire Bureau of Securities Regulation sanctioned the firm in connection to allegations it failed to establish and maintain a supervisory system reasonably designed to oversee the activities of its New Hampshire-based agents with regard to the sale of non-traded real estate investment trusts to New Hampshire residents. The firm was ordered to make remediation to affected customers and issued a fine of $750,000.

In 2015 a customer alleged LPL Financial committed fraud, breached contract, failed in its supervisory duties, acted negligently, made misrepresentations of material facts regarding investments in exchange-traded funds, and breached its fiduciary duty. The complaint resulted in an award to the customer of $160,000.

In 2015 FINRA sanctioned the firm in connection to allegations it failed to enforce its supervisory procedures regarding the sales of certain non-traditional exchange-traded funds, variable annuity contracts, non-traded real estate investment trusts, and other products. The firm was censured and ordered to pay a fine of $10,000,000.

In 2014 the Illinois Securities Department sanctioned the firm in connection to allegations it failed to detect improper and fraudulent conduct by one of its registered representatives, whom it allowed to remain a representative “while several facts, viewed together as a pattern of conduct, would have constituted” several red flags for “potential… improper conduct.” The firm was censured, issued a fine of $500,000, and ordered to pay restitution totaling $315,218.

In 2014 the Illinois Securities Department sanctioned the firm in connection to allegations it failed to properly maintain certain books and records regarding its variable annuity exchange activities and additionally that it failed to enforce supervisory protocols regarding the documentation of certain registered representatives’ variable annuity exchange activity. The firm was censured, ordered to pay a fine of $2,000,000, and ordered to pay restitution to affected customers of more than $819,800.

In 2013 FINRA sanctioned the firm in connection to allegations it failed to review and supervise 28 million “‘doing business as’ emails sent and received from thousands of representatives,” despite its awareness of “numerous red flags” that its supervisory system regarding such was not working properly. The firm was censured and ordered to pay a fine of $7,500,000.

In 2013 the Massachusetts Securities Division sanctioned the firm in connection to allegations it violated state and prospectus requirements, and that it failed to supervise and train its representatives in connection with the sale of non-traded real estate investment trusts. The firm was censured and issued a firm of $500,000.

In 2012 FINRA sanctioned the firm in connection to allegations it failed to establish and maintain supervisory protocols and procedures that would ensure the timely delivery of of mutual fund prospectuses. The firm was censured and issued a fine of $400,000.

In 2011 FINRA sanctioned the firm in connection to allegations it failed to establish, maintain and enforce a supervisory system adequately designed to review and monitor “all transmittals of funds and securities from the accounts of customers to third party accounts and accounts of registered representatives.” The firm was censured and issued a fine of $100,000.

In 2011 a customer alleged the firm breached contract, failed in its supervisory responsibilities, breached its fiduciary duty, acted negligently, and misrepresented material facts regarding investments in real estate investment trust securities and other products. The complaint resulted in an award to the customer of $141,250.

In 2011 the State of Pennsylvania sanctioned the firm in connection to allegations it failed to properly supervise the activities of at least two of its representatives. The firm was ordered to pay a fine of $400,000.

In 2011 the State of Illinois sanctioned the firm in connection to allegations it failed to reasonably supervise one of its representatives. It was ordered to pay a fine of $250,000.

In 2011 a customer alleged the firm acted negligently, breached its fiduciary duty, and failed in its supervisory duties. The complaint resulted in an award to the customer of $1,367,000.

In 2007 a customer alleged the firm engaged in activities unspecified on its BrokerCheck report. The complaint resulted in an award to the customer of $1,300,000.

In 2006 the National Association of Securities Dealers sanctioned the firm in connection to allegations it failed in its supervisory duties regarding its variable annuity exchange business. The firm was censured and issued a fine of $300,000.

In 2005 the National Association of Securities Dealers sanctioned the firm in connection to allegations it had deficiencies in its supervisory policies regarding class B and C mutual fund shares, and that it failed to establish, maintain and enforce supervisory and compliance policies to ensure its advisors made adequate disclosures when recommending mutual fund shares. The firm was censured and ordered to pay a fine of $2,400,000.

In 2005 the NASD sanctioned the firm in connection to allegations it maintained revenue sharing programs that involved certain “mutual fund complexes” paying the firm a fee for preferential treatment, such as “enhanced access” to its sales force and involvement in meetings. According to the NASD’s findings, “one fund complex paid all, and some paid part of their fees for participating in the programs by directing brokerage commissions to the firm.” The firm was censured and issued a fine of $3,602,398.

In 2006 a customer alleged the firm breached its fiduciary duty, made misrepresentations of material facts regarding mutual funds and annuities, and failed in its supervisory duties. The complaint resulted in an award to the customer of more than $211,600.

In 2004 a customer alleged the firm breached its fiduciary duty, breached contract, failed in its supervisory duties, and acted negligently in connection to investments in government securities, municipal bonds, and mutual funds. The complaint resulted in an award to the customer of $1,344,049.

If you or someone you know has lost money investing with LPL Financial, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.
 

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