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FINRA Hits LPL with $11.7 Million in Sanctions

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The Financial Industry Regulatory Authority (FINRA) announced today that it has sanctioned LPL Financial LLC $11.7 million for a range of supervisory failures including the sales of non-traded real estate investment trusts (REITs).

FINRA censured and fined LPL $10 million for supervisory failures in several areas including sales of non-traditional exchange-traded funds (ETFs), certain variable annuity contracts, non-traded REITs, and other complex products, plus, failure to monitor, report, and deliver trade confirmations to customers in over 14 million transactions.

LPL was ordered to pay about $1.7 million in restitution to certain customers that purchased non-traditional ETFs.

“LPL’s supervisory breakdowns resulted from a sustained failure to devote sufficient resources to compliance programs integral to numerous aspects of its business,” commented Brad Bennett, FINRA Executive Vice President and Chief of Enforcement in a statement.

According to FINRA, LPL failed to supervise sales of non-traded REITS and other complex products at various times over many years.

“Additionally, LPL failed to supervise non-traded REITs by, among other things, failing to identify accounts eligible for volume sales charge discounts,” said FINRA in a press release.

LPL did not deny the charges nor admit to FINRA’s claims, however, the independent broker-dealer consented to the entry of the organization’s findings.

“With today’s action, FINRA reaffirms that there is little room in the industry for lax supervision and that it will not hesitate to order firms to review and correct substandard supervisory systems and controls, and pay restitution to affected customers,” added Bennett.