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TAG | LPL Financial sale of private placements

May/13

21

Broker/Dealers Making Changes to Selling Practices of Alternative Investments Particularly to Elderly Investors

Comments off · Posted by Securities Lawyer in FINRA

With mounting pressure from regulators, broker/dealers are making changes to how they sell alternative investments.

VSR Financial Services Inc., Berthel Fisher & Co. Financial Services Inc. and the Cetera Financial Group Inc., which has four independent-contractor broker-dealers under its umbrella, this year have revised policies or added new guidelines and procedures for the sale of certain alternatives, such as nontraded real estate investment trusts (REITs), according to Bruce Kelly in a recent article from InvestmentNews.com.

These changes particularly affect alternative investments that are illiquid. Illiquid securities are not traded on an exchange, leaving investors with little or no ability to sell them immediately. Illiquid products remain enormously popular with clients.

In making these changes, the broker-dealers are following the lead of both state regulators and FINRA, the Financial Industry Regulatory Authority Inc.

In February LPL Financial LLC agreed to pay Massachusetts $500,000 to settle complaints tied to the firm’s sale of nontraded REITs, which are illiquid real estate investment trusts. Massachusetts Commonwealth Secretary William Galvin in December had charged LPL with failure to supervise registered representatives who sold the nontraded REITs in an alleged violation of both state limitations and the company’s rules.

For clients who are 70 to 75, the maximum percentage of illiquid investments a client can own is 25% of a portfolio; for clients between 75 and 84, the new maximum is 15%. The firm is not accepting orders for illiquid investments — commonly referred to as direct participation programs — for clients who are 85 and above.

If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call Soreide Law Group for a free consultation on how to potentially recover your losses at 888-760-6552.

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Mar/13

22

Growth of LPL Financial Creating Problems with Regulators

Comments off · Posted by Securities Lawyer in FINRA

According to a recent article in the New York Times, LPL Financial, has 13,300 brokers, 6,500 offices, 4.3 million customers — and a growing list of problems with regulators.

LPL is now the nation’s fourth-largest brokerage firm — after Wells Fargo, Morgan Stanley and Merrill Lynch — and the largest in much of rural America–its specialty. LPL’s explosive growth has brought the difficulties regulators face in overseeing far-flung financial advisers.

LPL has been censured by state and federal authorities with unusual frequency. LPL brokers have been penalized for selling complex investments to unsophisticated investors, for speculative trading in customer accounts, and, in a few cases, for outright stealing from clients.

State regulators in Illinois, Massachusetts, Montana, Oregon and Pennsylvania have penalized LPL for failing to oversee its brokers properly.

Many investors have turned to independent brokerage firms like LPL. LPL brokers are essentially contractors. They get LPL e-mail addresses and come under LPL compliance but pay for office space and staff. With overhead costs relatively low, the company can pass a large percentage of commissions and fees — upward of 80 percent — back to its brokers.

But analysts say that the high commissions leave LPL less money for compliance and can attract brokers interested in skirting the rules.

Massachusetts secretary of the commonwealth, William F. Galvin, came to a $2.5 million settlement with LPL in February. Mr. Galvin said LPL had failed to properly examine who the products were being sold to, and had pushed the investments without mentioning that they provided big commissions to LPL and its brokers. In Washington State last year, authorities brought a case against a LPL broker who had sold nontraded REITs to dozens of older clients.

In the latest quarter LPL executives said they had added 182 brokers and increased revenue 14 percent from a year earlier.

If you or a family member have experienced losses through LPL Financial, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses at 888-760-6552.

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Nov/11

29

LPL Financial Fined for ‘Oversights’ Involving Elderly Clients

Comments off · Posted by Securities Lawyer in FINRA

In a November 23, 2011, article in FA Magazine, Karen DeMasters writes that LPL Financial has been fined $100,000 for failing to properly oversee one of its brokers in Oregon who sold risky investments to people, many of them elderly and without the mental capacity to make investment decisions.

It was reported that the Oregon Division of Financial and Corporate Securities says LPL Financial, a division of LPL Investment Holdings Inc., has since improved it oversight procedures.

This fine stemmed from the actions of Jack Kleck, branch manager for LPL Financial in La Grande, Ore., who sold investments in high-risk oil and gas partnerships to nearly three dozen Oregon residents. Many of the investors were elderly and the investments were not suitable for the clientele, given their age and investment objectives, the division says.

The Oregon division found LPL Financial violated securities laws, including failing to diligently supervise the actions of its broker and failing to ensure company policies and procedures were enforced.

Jack Kleck’s securities license was revoked in 2007, barring him from doing business in Oregon, and a subsequent investigation led to the fine against LPL, says Melanie Mesaros, division spokeswoman. Kleck was fined $30,000. Many of Kleck’s clients were in their seventies and eighties and some were not capable, due to poor health, of making sound investment decisions, the division says.

“This case underscores the importance of investing with individuals and firms licensed by the state of Oregon,” says David Tatman, division administrator. “The state examines licensed brokerage firms and the division will take appropriate action against firms that do not comply with the law.”

DeMasters writes that LPL has taken numerous steps to improve its compliance and supervisory practices, the Oregon division says. The company has increased the number of employees devoted to compliance and supervision related functions, increased
its pre-sale review of transactions and enhanced branch office examinations.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with LPL Financial or Jack Kleck, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Sep/11

14

Did You Invest In Laeroc Funds?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, announced that they are currently investigating the sale of the Laeroc Funds, including the Laeroc 2002 Income Fund LP, Laeroc 2004-2005 Income Fund LP, Laeroc 2005-2006 Income Fund LP, Laeroc Edge Fund LP and Laeroc Income Fund 2007, LP.

These Laeroc funds were sold as real estate private placements (under Regulation D).  Typically, these funds were sold by brokerage firms such as LPL Financial, LLC, and Commonwealth Financial Network. Laeroc Funds is a real estate investment firm that has created 14 funds. Laeroc focuses on income properties with a high concentration in the western US.

The Laeroc funds have suffered substantial declines in value. The Laeroc 2002 Income Fund, L.P. announced the dissolution of the fund to the investors. The Laeroc 2005-2006 Income Fund LP is attempting to raise millions to pay off at least $49 million of debt. This fund recently issued a ‘cash call’ to its investors.

Many broker-dealers marketed these investments as safe and secure to their clients. FINRA has announced that it is monitoring the sale of real estate funds and, in particular, the ways in which broker/dealers marketed and sold the products to their investors. FINRA requires that brokerage firms perform reasonable due diligence on private placements.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you feel you have experienced a loss with the Laeroc Fund sold by Commonweath Financial Network, LPL Financial, or any other broker/dealer, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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