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July 27, 2015 at 09:54 AM
LPL Financial’s Chairman and CEO told the thousands of advisors attending its annual advisor conference in Boston today to make sure they maintain the “right documentation” of their activities because LPL has “to show the regulators the quality of your work and information you have.”
At the same time he thanked the firm’s advisors for their patience as LPL addresses the risk management and compliance issues that have cost the firm millions of dollars in fines and restitution to investors in recent years.
Casady said LPL has doubled the number of staffers working in risk management and compliance to protect advisors, investors and the firm, and “is close to being done” resolving enforcement issues.
Casady noted that more than half the money it had paid out in enforcement charges related to the sales of leveraged ETFs and mutual fund shares was being returned to investors. “We’re happy to do that [but], we need your help,” he said.
LPL spent a total $36 million in regulatory charges for 2014 — four times what it incurred in the previous two years for risk management and compliance issues, according to Casady’s 2014 Letter from the Chairman.
This year the Financial Industry Regulatory Authority levied a $11.7 million charge against LPL for supervisory failures in the sale of complex products and ordered that $6.3 million be paid in restitution for failing to waive mutual fund upfront charges on certain retirement and charitable organization accounts.
In addition, New Hampshire regulators want LPL to pay $3.6 million in fines and restitution for alleged unsuitable sales of nontraded real estate investment trusts to investors, and the Massachusetts Attorney General fined the firm $250,000 for brokers using false senior-specific designations.
