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FINRA Sanctions LPL Financial, Orders Firm to Pay $11.7 Million

By May 6, 2015September 20th, 2017News

FINRA has ordered LPL Financial, LLC (“LPL”) to pay a $10 million fine and pay approximately $1.7 million in restitution to certain customers who purchased non-traditional exchanged-traded funds (“ETFs”).

FINRA found that LPL failed to supervise the sale of certain complex structured products, which included exchange-traded funds (“ETFs”), variable annuities, and non-traded real estate investment trusts (“REITs”). FINRA also found that LPL failed to monitor and report trades and deliver to customers more than 14 million trade confirmations.

According to the Letter of Acceptance, Waiver and Consent that LPL entered into with FINRA, FINRA found that LPL “failed to review the length of time its customers held certain of these securities [ETFs]. Certain of LPL’s customers held these securities for more than a year, despite the risks associated with such lengthy holding periods. The Firm’s written supervisory procedures required its representatives to monitor non-traditional ETFs held in customer accounts on a daily basis. . . . However, during this time period, the Firm did not have a supervisory system in place to monitor holding periods or non-traditional ETFs in customer accounts. Additionally, LPL failed to enforce allocation limits in connection with its sales of non-traditional ETFs.”

A review of LPL’s disciplinary history reveals that LPL has received numerous fines and sanctions from FINRA and other state regulators over the past five years. These include:

  • A $2 million fine from the Illinois Securities Department in June 2014
  • A $950,000 fine from FINRA in March 2014
  • A $7.5 million FINRA fine in May 2013
  • A $500,000 fine and $2 million in restitution to customers ordered by the Massachusetts Securities Division in February 2013
  • A $400,000 FINRA fine in December 2012
  • A $175,000 FINRA fine in December 2010

Wall Street Journal article


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