LPL Financial Fined $900,000 for Failing to Send Required Account Notices, Supervisory Failures

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FINRA fined LPL Financial $900,000 for failing to send customers more than 1.6 million account notices required under the Exchange Act. Regulators admonished LPL for failing to send over 25% of required notices from 2009 through December 2016, and additionally concluded that LPL's supervisory systems and procedures were not reasonably designed to achieve compliance with securities laws and industry regulations regarding book and record keeping requirements.

FINRA AWC #2015045887301

The findings state that in addition to failing to send more than 1.67 million required account notices pertaining to suitability determinations, LPL failed to update its systems to identify hold recommendations as a trigger event for such notifications, even though industry rules state that hold recommendations are subject to suitability review.

FINRA found that LPL's failure rate peaked at 42% in 2012 and averaged 25%—or 1.67 million notices in total—over the eight-year period.

The present action constitutes just the latest punishment for LPL, whose relevant disciplinary history includes a $10 million fine and $1.6 million restitution order for "multiple supervisory failings and other deficiencies" (2015), a $2 million fine for failing to enforce supervisory systems and adequately maintain books and records (2014), and a $7.5 million penalty for failing to retain and review hundreds of millions of e-mails that should have been archived (2013).

In a separate December 2016 disciplinary action, FINRA fined LPL $750,000 for "significant" deficiencies related to the preservation and protection of electronic brokerage and customer records, or lack thereof.

If you have invested with LPL Financial LLC, or with any brokerage whose failure to send you a required account notice, such as a suitability determination or financial statement as required by law or rule, or whose supervisory failures such as record- or bookkeeping deficiencies resulted in a communication breakdown that has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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