LPL Financial LLC, the nation’s largest independent broker-dealer, was fined $450,000 by the State of Texas and ordered to repurchase certain securities it sold to investors.
The order is part of national settlement between state securities regulators and LPL over the brokerage firm’s sale of unregistered and non-exempt equities and fixed-income securities to its clients.
Under terms of the settlement, LPL agreed to offer to repurchase from Texas investors the unregistered securities that were sold since Oct. 1, 2006. If the securities have been sold, LPL agreed to pay damages to the investor. LPL will pay 3 percent interest per year on the value of securities it pays in damages or by repurchasing.
“I am pleased with the robust and meaningful recovery to Texas investors and appreciate LPL’s work with regulators to achieve this outcome,” said Texas Securities Commissioner Travis Iles.
The multi-state investigation focused on LPL’s retention, use, and subsequent cancellation of third-party services integral to its compliance with state registration requirements.
State securities regulators concluded that LPL offered and sold unregistered, non-exempt securities and failed to reasonably supervise the flow of information to ensure full and proper compliance.
Regulators claim that LPL failed to maintain adequate systems to reasonably supervise its agents, staff, and employees to prevent the sale of such securities, and that LPL failed to maintain its books and records necessary to comply with state registration requirements.
In addition to the fine, LPL will contribute $49,000 to the Investor Protection Trust, a nonprofit organization that supports investor education efforts in Texas and other states.