Montana Cases Highlight LPL Financial's Failure to Supervise
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 unsuitable.
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.