Massachusetts securities regulators said Monday that they are investing sales practices tied to private placements. The sweep targets LPL Financial and nine other broker-dealers that sell these investments. At least 15% of the brokers at each of the firms have current disciplinary incidents — “bad brokers” in the regulators’ parlance.
The move follows a recent story in The Wall Street Journal highlighting firms who employ agents with disciplinary history and are selling billions of dollars per year in private company stakes — often targeting seniors; some $710 billion of private placements were sold in 2017, according to the report.
The state’s sweep also comes about three weeks after Jay Clayton, chairman of the Securities and Exchange Commission, told attendees at a town hall discussion in Atlanta that the agency is “looking at our private placement rules; they can use a sprucing up.”
“While my office is actively policing agent misconduct and diligently working to keep bad actors out of the commonwealth [of Massachusetts], it is necessary for the firms which employ agents with disciplinary history to closely supervise their sales activities,” William Galvin, head of the securities unit in Massachusetts, said in a statement.