The Financial Industry Regulatory Authority announced today that it ordered
LPL Financial to pay $11.7 million in fines and restitution for widespread supervisory
failures related to the sale of certain investments, including certain
exchange-traded funds, variable annuities and non-traded real estate investment trusts.
According to the
Letter of Acceptance, Waiver, and Consent, beginning in 2007, LPL significantly increased its size, and the number
of registered representatives grew from approximately 8,000 to over 17,000
by 2013. FINRA alleged that LPL did not accompany this massive growth
with sufficient resources to permit LPL to meet its supervisory obligations.
As a result, FINRA alleged that LPL failed to have an adequate system
in place to supervise certain aspects of its business.
FINRA alleged that LPL was not reasonably supervising the sales of complex
products such as exchange-traded funds, and that LPL failed to monitor
the length of time these securities were held in customer accounts. It
also alleged that LPL failed to supervise the sale of variable annuities,
and in some instances permitted sales without disclosure to the customer
of surrender fees. It also alleged that LPL failed to supervise the sales
of non-traded real estate investment trusts.
Financial and securities brokerage firms have a legal duty to supervise
their brokers and their brokers' recommendations to clients to ensure
compliance with and prevent violations of the rules of the security industry.
When an individual broker is negligent or acts in an unlawful manner against
the interests of the client and that client suffers damages as a result
of such wrongdoing, the firm may be held liable for the investor's losses.
We have won hundreds of millions of dollars in losses for clients nationwide,
including in cities such as Miami, Dallas, San Diego and Cleveland. For
assistance with your
failure to supervise claim, call us or complete our online form for a
free case evaluation.