LPL Fined $1 Mln for Unregistered Brokers in Massachusetts
(Adds response from LPL in fifth paragraph.)
LPL Financial agreed to pay the state of Massachusetts a $1.1 million fine for failing to properly register brokers and for late filing of reportable events.In a consent order with the state signed on Wednesday, the independent broker-dealer admitted that over the past six years it failed to register 651 agents in violation of state securities laws. The order also says that LPL failed to file timely notice of nearly 800 reportable events, including customer complaints, criminal events, regulatory actions, bankruptcies, and judgments or liens.
LPL’s failure to register the brokers prevented the regulator from reviewing their qualifications and disclosure histories, the consent order said.
LPL, which in 2017 also paid Massachusetts and customers in the state $3.7 million for failing to supervise annuities sales by now-barred broker Roger Zullo, also agreed on Wednesday to a censure and to an overhaul of internal procedures.
“We continue to enhance our controls around timeliness of regulatory reportings and licensing,” LPL spokesman Jeff Mochal said in an e-mailed statement. “This is part of our ongoing focus on effective risk management and compliance practices that protect our advisors and their investors.”
Massachusetts sanctions on Wednesday follow a separate $1 million fine that LPL agreed to pay Massachusetts in 2017 for failing to supervise credit-union affiliated brokers operating in the state.
The largest U.S. independent broker-dealer also reached a $26 million nationwide settlement last June with state securities regulators over shoddy sales practices, unregistered securities sales and failure to supervise. The settlement was reached with a North American Securities Administrators Association taskforce led by Massachusetts Secretary of State William Galvin.
“This is not the first time that we have had dealings with LPL, and I think that this case serves as an example that my Securities Division will continue to closely monitor those who have been found to be conducting securities business in Massachusetts without being registered,” Galvin said of the new consent order.
Galvin is an aggressive regulator who earlier this week announced that Massachusetts will be the first state requiring investment advisers to create standalone single-page fee tables for customers and prospects.