Skip to Main Content
SUBMIT A TIP RECEIVE DAILY NEWS
Menu AdvisorHub
  • News
      • Latest News
          • James Gorman, Chairman and CEO Morgan StanleyMorgan Stanley’s Gorman Tops Dimon as Best-Paid Big Bank CEO
          • Reading financial newsThis Week’s Top Stories: Morgan Stanley Boots Texas Broker, Merrill’s 2020 Growth Numbers and More
          • RIA DealsRIA Deal-making Hits Record Despite Pandemic
          • Advisor MoneyWells Fargo Recoups $2.5 Million from New Jersey Duo
        • Close
      • Advisor Moves
          • Boca Raton, FloridaRockefeller Lures Two Florida Teams with $9.8 Mln Revenue
          • Morgan Stanley, UBS Advisor movesMorgan Stanley Rehires $3.3-Mln UBS Team in North Carolina
          • Lars Olson of Sanctuary Wealth Partners in Marion, OHSanctuary Hires $435-Mln Merrill Team, Snowden Lures Another from Retirement
          • Stifel Investment CompanyStifel Hires 33-Year Brokerage Vet from Jefferies in Dallas
        • Close
      • Enforcement
          • Advisor MoneyWells Fargo Recoups $2.5 Million from New Jersey Duo
          • Businessman in prison, fraudWells Fargo Claws Back $3 Million from Jailed Ex-Broker
          • Finra signFinra Fines, Supends Ex-Ameriprise Broker Who Flipped ‘A’ Shares
          • Barred from the securities industry.SEC Puts Nail in Ex-Morgan Stanley Broker’s Career Coffin
        • Close
      • Markets
        • `Nothing Safer Than Cash’: Tech Rout Puts Silicon Valley on Edge
        • ‘Any News Is Bad News’ as Earnings Fail to Save Equity Bulls
        • ‘50 Cent’ Profited From Volatility Jump, Wells Fargo Says
        • ‘Beaten Down’ ETF Is a Way to Play Inverted Curve, BofA Says
        • Close
      • Opinion
          • Opinion-How-Will-The-Coronavirus-Affect-The-Stock-Market-Opinion: Coronavirus – What Advisors Need to Know
          • opinion-investors-conquered-fees-next-up-is-their-own-behaviorOpinion: Investors Conquered Fees but Not Their Own Behavior
          • Investor-Confidence-In-Stocks-Rightly-Declines-Opinion-772x485Investor Confidence in Stocks Rightly Declines: Opinion
          • Opinion-Schwabs-Zero-Commission-Decision-Challenges-Its-Ria-ClientsOpinion: Schwab’s Zero Commission Decision Challenges Its RIA Clients
        • Close
      • Fintech News
          • System outageMerrill Systems Hiccuped on Thursday as Stocks Slid
          • 7 dollar rolls‘The Rock’ Invests in Finance App Acorns, and New Users Get $7
          • TraderHigh-Frequency Traders Love Business With Robinhood
          • EtheriumJay Z, Charles Schwab-Backed Ethereum App Opens Doors to Public
        • Close
      • From the Publisher
          • 2021 PredictionsFrom the Publisher: Sirianni’s Predictions for 2021
          • Josh Rogers – 772×485Seven Questions with Tony Sirianni: Josh Rogers, Founder and CEO, Arete Wealth
          • Phil Hildebrandt — 772×485Seven Questions with Tony Sirianni: Phil Hildebrandt, Principal, CEO of Segall Bryant & Hamill
          • Christian Hyldahl, President of Varium Investment Partners-772×485An AdvisorHub Interview with Christian Hyldahl, President of Varium Investment Partners
          • John Peluso – 772×485Timely interview with John Peluso and AdvisorHub CEO Tony Sirianni
          • Louis Dworsky Coronacrash Interview-772×485Coronacrash Update: Hayden Royal’s Louis Dworsky & Tony Sirianni
          • Stratos_Jeff pic.jpg-772×485Coronacrash Update: Stratos Wealth Partners’ Jeff Concepcion & Tony Sirianni
          • coronacrash ben harrison – 772×485Coronacrash Update: BNY Mellon | Pershing’s Ben Harrison & Tony Sirianni
        • Close
    • Close
  • Deals & Comp
  • Recruiting Wire
  • Breakaway Center
  • Resources
    • resources-home-menuResources Home
    • PRACTICE MANAGEMENT RESOURCESPractice Management Resources
    • Transition ResourcesTransition Resources
    • Fintech ResourcesFintech Resources
    • menu fintechFintech Product Directory
    • Menu-Institute-772×485Institute
    • Boutique Wealth AdvisorsBoutique
    • EventsEvents
    • Asset Manager Hub
    • Close
  • AdvisorHub TV
  • Podcasts
  • RIA Center
  • Virtual Summit
close X
May 4, 2017

LPL Pays More to States, Doubles Down on Rollover Compliance

by Jed Horowitz
|
News
|
LPL
|
No Comments
Share This
SUBMIT A TIP
LPL Pays More to States, Doubles Down on Rollover Compliance

LPL Financial, which chalked up more than $75 million in fines and restitution orders from 2014 through 2016, moved more legal events to the front-burner this week.

The world’s biggest independent broker-dealer, which operates through a salesforce of more than 14,000 non-employee brokers, was ordered Thursday to pay Massachusetts $1 million for failing to supervise credit union-affiliated brokers.

On Wednesday, New Hampshire regulators said LPL will compensate state investors up to $8 million because of non-traded REIT sales practice violations that already cost the firm $750,000 in fines.

Earlier this week, LPL told its brokers that it is proceeding with requirements that will limit how they can reach out to investors and prospects regarding retirement account investments so that it can “appropriately manage risk” associated with the Department of Labor fiduciary rule scheduled to go into effect on June 9.

The DOL rule, as currently written, considers any communication suggesting a rollover from a 401(k) or other employer retirement plan to a broker-housed individual retirement account to be advice that would trigger fiduciary responsibilities, with potentially punitive consequences. LPL and the brokerage industry are most concerned about a best-interest contract they would have to sign that would allow IRA customers to sue over prudence and loyalty violations.

Many brokerages have halted plans on how to guide their brokers regarding rollover accounts, pending the outcome of a review of the DOL rule that the Trump administration has ordered. The rule would permit “educational” discussions about investments but require the contract if conversations veer into advice.

“LPL will continue to maintain an education-only policy when discussing with an investor a roll out of assets from a plan such as a 401(k) to an LPL IRA account or LPL-custodied retirement plan,” the firm told brokers in a memo this week, though it admitted that it is still trying to define the policy. “We are continuing to evaluate enhancements to appropriately manage risk and will be issuing additional guidance in the near future.”

The memo said that effective June 9 LPL will require brokers to retain formal “rationale” documents in their files to show that they have exercised prudence in opening new accounts, noting the firm has upgraded its ClientWorks software to build the function into the account opening process if they want to use it rather than create their own documents. In the short term, it is not requiring a “rollover rationale form” as part of brokers’ legal-protection armamentarium. The memo did not explain why, though the best-interest contract provisions of the fiduciary rule that includes lawsuit authorizations is not scheduled to become effective until January 2018.

LPL did not make a direct connection between its state regulatory settlements and its caution on the DOL fiduciary rule. In a separate memo brokers received this week, Andy Kalbaugh, divisional president for national sales, positioned LPL’s preparations for the rule as a distinguishing advantage.

“There’s been a lot of speculation about the future of the rule given the regulatory environment and political actions. While this has caused other companies to slow or even discontinue their work, we’ve remained steadfast and focused on our behind-the-scenes preparations so we could pivot to any outcome and position you for growth in this dynamic environment,” he wrote. “Disruption can open the door to earning new business while the unprepared flounder; we’re providing you with solutions so you are not only prepared, but can harness the opportunities ahead to enhance your client relationships and grow your practice.”

As for the state settlements, Massachusetts fined LPL $1 million for failing to supervise brokers who were based at Digital Federal Credit Union and gave the impression that they were selling securities as credit union employees. They participated in illegal securities sales contests, received other credit union- paid bonuses based on commissions, used “inconsistent and confusing” business cards branding themselves as DCU Financial employees and made misleading statements about how they were compensated.

“Credit union members are hard-working average investors who should not find themselves subject to these type of aggressive sales practices and misleading and confusing disclosures,” Secretary of State William Galvin said in a prepared statement.

LPL spokesman Jeff Mochal said the firm has made “a long-term commitment to enhancing our risk management and compliance structures” and is pleased to have resolved the matter. LPL executives have said that its credit union and small bank business is among its fastest-growing channels.

Under the New Hampshire agreement announced on May 3, LPL said it will offer state residents up to $8 million in remediation.  People who sold their investments at a loss are likely to accept the offers, while some REIT holders with gains would be better off keeping the investments, said a person familiar with the settlement.

“We are pleased to have reached a final resolution with the State of New Hampshire Securities Bureau regarding this matter from 2015,” Mochal said. LPL has dedicated substantial resources to improving our processes and technology and enhancing our practices around the processing, sale, and supervision of complex products, and we believe these efforts will lower the firm’s risk profile and provide even greater consumer protection going forward.”

On a conference call with analysts last week, LPL said that its first-quarter regulatory compliance costs fell 16% to $5.3 million from the year-earlier period and predicted that total compliance expenses for 2017 will remain about flat with last year at about $17 million.  Expenses related to compliance, supervisory and regulatory and legal issues were $34 million in 2015.

-Mason Braswell contributed to this story.

 

Like this article? Let AdvisorHub come to you!  Sign up

Share This
No Comments

Leave a Reply Cancel reply

Tony Sirianni Podcast Banner

CORONACRASH NEWS

  • Merrill Touts Success of Growth Strategy in Pandemic-Afflicted Year

    Merrill Touts Success of Growth Strategy in Pandemic-Afflicted Year

    Jan 19, 2021
  • Raymond James Slashes CEO Pay 17% in Turbulent Year

    Raymond James Slashes CEO Pay 17% in Turbulent Year

    Jan 8, 2021
  • Solomon Sees Vaccine Bringing Goldman Staff Back by End of Year

    Solomon Sees Vaccine Bringing Goldman Staff Back by End of Year

    Jan 5, 2021
  • J.P. Morgan Bank Broker Cleared of Coronavirus Crash Claim

    J.P. Morgan Bank Broker Cleared of Coronavirus Crash Claim

    Dec 4, 2020
  • Edward Jones Broker Count Up 5%, Firm Pauses Branch Growth

    Edward Jones Broker Count Up 5%, Firm Pauses Branch Growth

    Nov 5, 2020

NEWS

  • Morgan Stanley’s Gorman Tops Dimon as Best-Paid Big Bank CEO

    Morgan Stanley’s Gorman Tops Dimon as Best-Paid Big Bank CEO

    Jan 23, 2021
  • This Week’s Top Stories: Morgan Stanley Boots Texas Broker, Merrill’s 2020 Growth Numbers and More

    This Week’s Top Stories: Morgan Stanley Boots Texas Broker, Merrill’s 2020 Growth Numbers and More

    Jan 23, 2021
  • RIA Deal-making Hits Record Despite Pandemic

    RIA Deal-making Hits Record Despite Pandemic

    Jan 22, 2021
  • Wells Fargo Recoups $2.5 Million from New Jersey Duo

    Wells Fargo Recoups $2.5 Million from New Jersey Duo

    Jan 22, 2021
  • Former Wells Client Associate Files Overtime Class-Action Suit

    Former Wells Client Associate Files Overtime Class-Action Suit

    Jan 22, 2021

FINANCIAL INDUSTRY PODCASTS

AllIndependenceSuccess
The must listen-to podcast for financial advisors by Tony Sirianni. Guests to include:
-Ron Kruszewski
-Shirl Penney
-Penny Pennington
-Eric Clarke
and many more
Michael Kitces and Carl Richards discuss financial advising topics.
Suzanne Siracuse asks the questions nobody else asks, as influencers and interviewer collide in her new and truly unique podcast series The Big Reveal.
The “new advice value stack,” and how firms can use it to help maximize their own value propositions for their clients.
The Brighthouse Financial Insights Panel is a group of leading, independent experts providing powerful insights into the big challenges facing you and your clients.
Equipping independent financial advisors with the tips, insights, and knowledge needed to evolve in every aspect of his or her life
Powering Independence Podcast, insights and ideas for RIAs, presented by Dynasty Financial Partners. A podcast dedicated to presenting fresh ideas and best practices for the wealth management industry.
As an industry expert, Frank LaRosa provides guidance and advice on a host of topics from recruiting and transitions, succession planning, practice management, M&A and more.
Our goal is to unlock the challenges to reveal the opportunities and what it means to provide advice in the 21st century.
Our webcast is dedicated to helping our viewers get real insights by avoiding the cognitive dissonance of today’s media outlets and biased editorial filters.
Go behind the scenes with registered investment advisors and other related independent business model experts
As a nationally recognized recruiter and consultant to financial advisors, Mindy Diamond has unmatched experience in introducing advisors to the independent space.
The must listen-to podcast for investors, venture capitalists and financial advisors, with Tony Sirianni and Paul Dietrich.
An Introduction to Independence: 5 Key Episodes to Jumpstart Your Knowledgebase
Jay is an investment strategist, CERTIFIED FINANCIAL PLANNER™ and business consultant to financial advisors.
In this podcast business owners, entrepreneurs and executives reveal their top tips for success.
We interview top financial advisors and visionary voices to bring you the strategies, tips, and tools you need to make a difference in people’s lives.
A financial literacy and commentary show that features a number of investors, financial experts, professional athletes, business owners and more.
Join Sound Financial Group CEO Paul Adams and President Cory Shepherd every week, as they help you Design and Build a Good Life™.
The Kuderna Podcast, focusing on wealth in it's original meaning- a state of well being.
Timeless wisdom, actionable information you can use right now to make smarter investment decisions.
Made for and dedicated to those folks serious about their financial plan.
Latest News 
Advisor Moves 
Enforcement 
Opinion 
  • About Us
  • Contact Us
  • Advertise
  • Events
  • Careers

 get our newsletter

Industry focused content and breaking news.

SIGN UP

Contact Us

EMAIL US
1707 Post Oak Blvd.
#484
Houston, TX 77056

© 2021 AdvisorHub
  • |Terms of Use
  • |Privacy Policy
  • |Advertise
  • |Careers
  • Facebook
  • Linkedin
  • Twitter

Back to top