On March 24th., 2014, LPL Financial was fined $950,000 for supervisory failures in the sales of alternate investments by the Financial Industry Regulatory Authority (FINRA). The deficiency in supervision is related to oil and gas partnerships, non-traded REITS, hedge funds, to name a few, and other illiquid investments. This fine is the latest in a series of actions against LPL. Last March, FINRA also fined LPL $7.5 million for 35 email system failures. FINRA ordered LPL to make a $1.5 million fund to compensate customers who were affected by those system failures. Also, in 2013, LPL was fined $500,000 by the Massachusetts Securities Division and LPL offered to return $2 million for similar violations involving the sale of non-traded REITS that were unsuitable for certain clients.
With this latest fine, FINRA found that between Jan. 1, 2008, - July 1, 2012, LPL failed to adequately supervise the sales of alternative investments that violated investor concentration limits. LPL was using a manual process to review whether an investment complied with suitability requirements, sometimes relying on outdated and inaccurate information. Then an automated review system was installed, but the database was not updated enough to accurately reflect suitability standards. According to FINRA, LPL also failed to train its supervisory staff to analyze properly the state standards within their suitability reviews of such products.
If you have experienced losses through LPL Financial, call a Securities Arbitration Lawyer at Soreide Law Group for a free consultation on how to potentially recover your losses at 888-760-6552.
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