Skip to content

FINRA Slaps LPL Financial with $950,000 Fine

LPL Financial LLC (LPL) is in some hot water as the Financial Industry Regulatory Authority (FINRA) announced today that it has fined the broker-dealer $950,000. The fine is a consequence of FINRA discovering “supervisory deficiencies” in LPL’s work with alternative investments. In addition to the fine, LPL must also review its policies, systems, procedures, and trainings to rectify any shortcomings.

FINRA found LPL to be guilty of inadequately supervising sales of alternative investments in regards to concentration limits.

From January 1, 2008 to July 1, 2012, LPL is accused of violating allocation limits set forth by different states as well as by LPL itself. FINRA attributes the violations to flawed processes for reviewing an investment’s compliance with suitability requirements in addition to inadequate training of its supervisory staff to detect such inconsistencies.

“In order to sell alternative investments, a broker-dealer must tailor its supervisory system to these products. LPL exposed customers to unacceptable risks by not having an adequate system in place that could accurately review whether a transaction complies with suitability requirements imposed by the states, the product issuers and the firm itself – and it failed to train its registered representatives to apply all the suitability guidelines appropriately,” commented FINRA Executive Vice President and Chief of Enforcement, Brad Bennett in a statement.

This is not LPL’s first run in with FINRA.

Last May, the company was hit with a $7.5 million fine, one of the largest ever issued by FINRA, for failing to properly oversee millions of e-mails. In today’s case, LPL has consented to FINRA’s charges, neither admitting nor denying them.