The Securities and Exchange Commission announced charges Friday against LPL Financial for multiple failures related to its anti-money laundering program and said the investment advisor and broker-dealer agreed to pay an $18 million civil penalty and implement improvements to policies and procedures to resolve the charges.
Without admitting or denying the SEC’s findings, the firm agreed to a censure and a cease-and-desist order in addition to the fine.
From at least May 2019 through December 2023, LPL experienced longstanding failures in its customer identification program, including a failure to timely close accounts for which it had not properly verified the customer’s identity, according to the SEC. The company also failed to close or restrict thousands of high-risk accounts, such as cannabis-related and foreign accounts, that were prohibited under LPL’s AML policies, the commission found.
“Federal law requires broker-dealers to ascertain the identity of their customers and to conduct ongoing customer due diligence to aid the government in its efforts to detect and prevent money laundering,” said Stacy Bogert, the SEC enforcement divisions' associate director. “When broker-dealers like LPL fail to comply with their AML obligations, they put the securities markets at risk. Today’s case underscores the importance of complying with applicable regulations in the areas of customer identification and ongoing customer due diligence.”
The SEC’s order finds that LPL willfully violated Section 17(a) of the Securities Exchange Act of 1934 and its Rule 17a-8. The order also directs LPL to continue its engagement of a compliance consultant to review and recommend changes to the firm’s AML policies and procedures.
"We cooperated with the SEC’s investigation and have taken proactive steps to enhance AML policies and procedures," an LPL spokesperson said. "We take our regulatory obligations seriously and are pleased to resolve this matter."
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