Montana Cases Highlight LPL Financial’s Failure to Supervise
LPL Financial – now the nation’s fourth largest brokerage firm
– is also one of the most commonly charged with
failure to supervise. Though LPL Financial spokeswoman Betsy Weinberger has stated that the
company has taken steps to improve its compliance and oversight processes,
state officials disagree. In fact, Montana securities regulator Lynne
Egan has said the company’s overall culture continues to let “egregious
problems” go unchecked.
“LPL is on our radar screen more than any other firm,” Egan told the NY Times.
Over the past five years, Montana regulators have brought eight complaints
against LPL Financial’s brokers. In 2009, for example,LPL Financial agreed to pay $1.3 million in restitution and $150,000 in fines to settle charges that it failed to supervise convicted
Ponzi schemer Donald Chouinard.
According to court documents, Chouinard, a former LPL Financial broker,
stole nearly $200,000 from his clients, made numerous
unauthorized trades in their accounts, and misrepresented the value of their investments.
Now, the state is
preparing to file another complaint listing multiple LPL Financial brokers
who allegedly sold non-traded real estate investment trusts (REITs) to unsophisticated Montana investors for whom the products were
The large number of complaints filed against LPL Financial and its Montana
brokers seems to be tied to the fact that nearly 50% of those brokers
officially supervise themselves. That’s a highly attractive scenario
for unscrupulous brokers and con artists. It’s also one –
that unless corrected – will continue to put LPL Financial squarely
in the hot seat.
If you lost money while doing business with an LPL Financial broker please
contact one of our experienced investment fraud attorneys today.
Our firm is actively investigating complaints against LPL Financial and
its brokers, including complaints involving the unsuitable recommendation
and sale of REITs, ETFs, and other complex products. Use the contact form
at the bottom of this page or call us toll-free today.