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October 30, 2018 at 12:23 PM
Regulators fined LPL Financial $2.75 million for complaint-reporting and anti-money laundering issues over a three-year period. The Financial Industry Regulatory Authority said the independent broker-dealer “failed to file or amend registered representatives’ Forms U4 or U5 to disclose dozens of reportable customer complaints.”
Overall, LPL “too narrowly interpreted the requirement that a complaint contain ‘a claim for compensatory damages of $5,000 or more’ to be reported,” the regulator explained.
According to FINRA, the IBD appears to have thought the phrase implied it did not have to report a complaint that did not “expressly request compensation,” even when a client alleged a sales-practice violation caused a loss of $5,000 or more “and the complaint, when viewed as a whole, made clear that the customer was seeking compensation.”
The regulatory group also said LPL did not review more than 400 attempts to gain unauthorized access to electronic systems that should have resulted in the filing of suspicious activity reports (or SARs).
