Massachusetts securities regulator William Galvin has fined LPL Financial (LPLA) $250,000 for failing to establish and enforce review procedures for senior-specific titles used by its broker-dealer agents and investment advisor reps.
“In these days when workers are increasingly having to assume responsibility for their retirement savings, it is vital that the financial services industry not employ titles that suggest an expertise in advising senior citizens when none exists,” Galvin said in a statement on Tuesday. “That is why Massachusetts has these rules in place.”
In 2007, Massachusetts was the first federal or state regulator to adopt a rule to protect the public against the use of bogus designations and or titles which imply some expertise or special training for managing seniors’ accounts.
Thirty-three states have adopted the North American Securities Administrators Association’s model rule on senior designations.
A books and records exam performed by the securities division in Massachusetts of a state-registered investment advisor found that a registered rep affiliated with LPL was using a title that did not conform to the state’s Senior Designation Regulations.
“LPL had approved the use of the title on the agent’s business cards three times,” the securities division states. “Based on this revelation, the Securities Division broadened its investigation into LPL’s compliance procedures for monitoring and approving senior-specific titles and credentials in compliance with the Division’s rule.”
LPL said in a statement shared with ThinkAdvisor that after the Massachusetts Securities Division reviewed LPL’s senior designation practices, LPL conducted a review and identified 10 reps who were using “certain titles that were either inconsistent with Massachusetts senior designation regulations or may have raised concerns of possible violations.”
LPL “has taken steps to implement enhanced review procedures and has agreed to pay a fine of $250,000. The firm is pleased to have reached a mutually agreeable resolution with the Securities Division,” the firm said in the statement.
In the course of its review, LPL disclosed to the Division that it “[i]dentified a gap in its current procedures with respect to [Senior Designation regulations].
“Pursuant to the Senior Designations Regulations, use of senior-specific credentials and designations which improperly suggest or imply certification or training beyond that which the titleholder possesses is prohibited,” the settlement notes, adding, “Since June 1, 2007, LPL did not establish, maintain, nor enforce a procedure to review senior-specific titles for compliance with the Senior Designations Regulations in the Commonwealth.”
Under terms of the settlement, LPL agreed to a censure and a cease and desist order. LPL must review its procedures regarding senior designations and establish them where they do not exist.