The Massachusetts Securities Division has fined LPL Financial $1.1 million for failing to properly register agents in Massachusetts and timely file certain reportable events. The fine was agreed to by LPL, the nation’s largest independent broker-dealer, as part of a consent order that also requires a review of the company’s policies and procedures.
The consent order states that over the past six years, LPL had 651 agents who were not registered in Massachusetts, a violation of state securities laws. The order also states that during the same time period, the broker-dealer failed to file timely notice of nearly 800 reportable events, including customer complaints, criminal events, regulatory actions, bankruptcies, and judgments or liens.
“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,” said Secretary of the Commonwealth William F. Galvin.
LPL was also the subject of a $26 million nationwide settlement last June, stemming from an investigation by a North American Securities Administrators Association (NASAA) taskforce led by Galvin. According to regulators, the investigation found that LPL had been negligent in its duty to supervise its agents and prevent the sale of unregistered securities to its customers over a 12-year period.
“LPL’s failure to seek initial registration of these agents in Massachusetts, or maintain their registration in Massachusetts, prevented the division from reviewing the agents’ qualifications and disclosure histories in its effort to protect Massachusetts investors,” the consent order states.
In addition to the fine and required review and overhaul of LPL’s internal procedures, the firm has been censured by the securities division and ordered to cease and desist in violations of state securities laws.