Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
LPL Financial sign in San Diego

Industry Spotlight > Broker Dealers

LPL Facing SEC Fine as High as $50M Over Texts, App Use

Your article was successfully shared with the contacts you provided.

LPL Financial is facing a fine from the Securities and Exchange Commission of up to $50 million over its lack of compliance with records preservation rules tied to off-channel communications like text messages, according to the firm’s annual report filed Wednesday.

The fine is for “business-related electronic communications stored on personal devices or messaging platforms that we have not approved,” LPL’s annual report states.

The firm added that it had ”not yet reached a settlement in principle with the SEC, and any settlement agreement remains subject to negotiation of the civil monetary penalty and definitive documentation.”

Under the SEC’s proposed resolution, LPL says it would pay up to $50 million as a civil monetary penalty. News of this penalty was first reported Friday by InvestmentNews; the broker-dealer, though, first disclosed details about the matter in its third-quarter report in late October.

The broker-dealer recorded a $40 million expense in the third quarter of 2023 to “reflect the amount of the penalty that is not covered by our captive insurance subsidiary,” its quarterly and annual report state.

On Feb. 9, the SEC charged five broker-dealers, seven dually registered broker-dealers and investment advisors, and four affiliated investment advisors for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications, including WhatsApp messages and texts.

The 16 firms agreed to pay combined civil penalties of more than $81 million.

LPL Financial — which has 22,660 advisors and $1.35 trillion of client assets on its platforms — is on a growth streak. It announced Friday that it had struck a deal with Wintrust Financial to move about 85 advisors and $16 billion in client assets onto its Institution Services platforms. Previously, these assets were held at First Clearing, a clearing and custody unit of Wells Fargo.

This news comes 10 days after LPL announced plans to buy Atria Wealth Solutions, which works with 2,400 advisors, 150 banks and credit unions, and $100 billion of assets.

In 2023, LPL Financial had total revenues of $2.3 billon, up 13% from 2022, and net income of $1.07 billion, up 26% from the prior year.

– Janet Levaux contributed to this report.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.