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LPL Financial LLC Set To Settle E-Mail Surveillance Matter With FINRA

LPL Financial LLC (“LPL”) has become one of the largest independent-contractor broker-dealers with over 13,000 registered representatives and 4.3 million customers. As a result of this success, LPL has been the subject of several regulatory investigations with federal and state regulators. Most recently, LPL self-reported to the Financial Industry Regulatory Authority, Inc. (“FINRA”) that it experienced problems with broker e-mail surveillance. Mark Casady, LPL’s Chief Executive stated to the media, “[t]urning to the regulatory environment, we self-reported a matter related to e-mail surveillance and production to our principle regulator in 2011. Since then, we have been working to implement enhancements to our supervisory systems and procedures related to these e-mail issues.” It is believed that LPL will settle the potential rule violations regarding their failure to properly monitor broker and investment advisers’ e-mails sometime during the summer of 2013. One of the other regulatory matters that plagued LPL during 2013 involved the Massachusetts Securities Division finding that LPL violated securities regulations when it sold nontraded real estate investment trusts (“REITS”) to customers, in violation of the state limitations and the company’s own rules and procedures. As a result of this, the Massachusetts Securities Division fined LPL $500,000 and ordered LPL to set aside $2 million for potential restitution to investors who purchased the nontraded REITs. At the end of 2012, FINRA also fined LPL for failing to maintain supervisory systems and procedures to ensure delivery of mutual fund prospectuses to investors.

Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses as a result of sales practice abuses. Please contact our team of attorneys for a consultation at (212) 696-1999.