LPL Financial recently agreed to pay regulators $900,000 over its failure to send and record over 1.6 million account notices to clients over a seven-year period.
This represents more than 25% of the notices it was required to issue related to accounts with suitability notices over different 36-month timeframes, according to the Financial Industry Regulatory Authority.
The firm did not deny or admit the findings of the ruling, which was issued by FINRA in late December, added to LPL’s BrokerCheck profile this week and then reported by Investment News.
“We’ve made a long-term commitment to enhancing our risk management and compliance structures,” LPL said in a statement. “We self-reported this issue to FINRA and are pleased to have resolved it.”
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“A variety of systemic issues caused the failure,” the regulator stated, including the exclusion of certain accounts from 36-month mailing cycles, missing or incorrect account data, and programming errors.
LPL also failed to update systems needed to “identify a ‘hold’ recommendation as a triggering event for the 36-month period. FINRA also found the IBD did not establish, maintain and enforce a supervisory system and written procedures “reasonably designed to achieve compliance …”.
Though the firm had written procedures for the account notices, the regulator says, these processes “did not require any supervisory review” or other steps to confirm that the notices in fact had been given to clients.
FINRA’s latest fine is one of 102 regulatory events for the IBD, which has a 267-page BrokerCheck file; details on the $900,000 resolution of the matter begin on page 22.