The Financial Industry Regulatory Authority fined LPL Financial $300,000 for allegedly failing to accurately calculate its required client reserve, which resulted in two hindsight deficiencies totaling about $162 million, according to FINRA.
The errors caused the firm to maintain inaccurate books and records and to file at least 17 Financial and Operational Combined Uniform Single reports that inaccurately reported its customer reserve, FINRA said.
LPL’s violations happened between “at least” December 2018 and April 2020, according to FINRA.
As a result of its failures, LPL violated the Securities Exchange Act of 1934, Exchange Act Rule 15c3-3(e) and F1NRA Rule 2010 governing standards of commercial honor and principles of trade, FINRA claimed. The Exchange Act rules aim to protect client assets from being improperly used by a broker-dealer for its own purposes, and ensure the prompt return of client assets in case a BD becomes insolvent, FINRA pointed out.