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LPL to Pay Restitution to Vermont Investors over Improper NTR Sales

The Vermont Department of Financial Regulation reached a settlement with broker-dealer LPL Financial to reimburse $460,000 to eight Vermont investors and pay the state a penalty of about $11,000. The settlement was the result of a multi-state investigation conducted by the North American Securities Administrators Association.

The investigation revealed that LPL agents did not comply with certain standards when selling non-traded real estate investment trusts between January 2008 and December 2013. Specifically, the investigation found LPL agents often failed to adequately consider an investor’s net worth and income in determining the suitability of the REIT investment. The regulators also noted that LPL failed to provide adequate supervision over its agents as this conduct was contrary its own policies.

“Non-traded REITs do not have an active secondary market, which can put investors in a bind if they need immediate access to their money,” said commissioner Michael Pieciak. “Accordingly, these investments are only appropriate for certain individuals.”

“This investigation has been ongoing for several years and the settlement with Vermont is good news for our investors,” he added. “It is also a great example of how NASAA coordinates the efforts of all state regulators to protect investors.”

The restitution to Vermonters ranges from $14,000 to $200,000. More than 2,000 investors were affected nationwide.

Last week, the New Hampshire Bureau of Securities Regulation announced that LPL Financial will pay residents up to $8 million in remediation over improper sale of non-traded real estate investment trusts.

LPL Financial, founded in 1989 by the merger of brokerage firms Linsco and Private Ledger, is headquartered in Boston and employs more than 14,000 financial advisors throughout the U.S.

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