LPL Financial Complaints
| November 19, 2019
LPL Financial is one of the nation’s leading diversified financial services company and the largest independent broker-dealer. Created in 1989 by merging together the brokerage firms of Linsco and Private Ledger, LPL Financial has headquarters in Boston, Charlotte, and San Diego. With more than $500 billion in assets under its management and more than 14,000 financial advisors, LPL Financial is licensed in all 50 US states and several US territories. The company deals in financial services including: bonds, annuities, equities, mutual funds, insurance, and fee-based programs.
A securities brokerage firm licensed by FINRA, Linsco/Private Ledger has a legal duty to supervise its brokers and its 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.
Unfortunately, LPL Financial has been the center of many regulatory actions and customer complaints and has accumulated well over 200 FINRA disclosures. Here, we want to discuss some of the most notable complaints made against LPL Financial in recent years.
Mutual Service Corp. Financial Complaints
Mutual Service Corp. was a brokerage firm based in West Palm Beach, FL that was established in 1969. Since then, Mutual Service has merged with Lowry Financial Services Corporation in 1989, doubling its number of brokers. Mutual Service Corp. is now a part of the LPL Financial family of companies after a 2007 merger and has nearly 1,500 registered representatives.
LPL Financial Investment Fraud & Complaints Against Them
LPL Financial Was Fined $26 Million For The Sale Of Unregistered Securities
On May 1st, 2018, the North American Securities Administrators Association (NASAA) announced that they had reached a $26 million settlement agreement with LPL Financial.
NASSA is tasked with protecting the rights and interests of investors internationally. This organization represents 67 different countries, as well as all 50 US states. This settlement was the result of a comprehensive investigation into LPL Financial and its securities representatives. Amongst the allegations were that LPL Financial failed to implement and maintain proper safeguards to ensure that its securities representatives were not improperly selling unregistered securities. In most circumstances, all securities must be properly registered.
The NASSA also stated that LPL Financial failed to maintain their books and records, which is a serious violation. Under the agreement reached, LPL Financial agreed to repurchase any unregistered securities that were sold to affected investors in violation. The settlement reaches back through October of 2006.
Failure To Supervise Securities Representatives Complaint Againt LPL
On February 6th, 2018, FINRA announced significant financial sanctions against LPL Financial. The sanctions were sought due to the firm’s alleged failure to supervise securities representatives under their employment. FINRA Says that during a relevant period of time, their regulators determined that LPL Financial failed to provide proper training to brokers regarding CD investments. FINRA said that many brokers did not fully understand risks involved in the products that they were offering, therefore leading to them not disclosing these risks to clients.
Unsuitable Investment Recommendations Complaint Against LPL
On October 24th, 2017, the New Jersey Bureau of Securities stated that LPL Financial agreed to a $950,000 settlement after it was shown that the financial services organization failed to ensure that their investment recommendations and securities sales met the state’s suitability requirements.
The NJ Bureau of Securities said that LPL Financial’s unsuitable investment recommendations occurred when the firm failed to ensure that their client’s liquid net worth assets were properly recorded and updated on LPL’s internal documents. Under New Jersey law, brokerage firms are required to update this information at least once every 36 months.
Exchange Traded Funds (ETFs): Material Misrepresentations Complaint Against LPL
On June 20th, 2017, a FINRA arbitration panel in Washington ruled in favor of an investor against LPL Financial. In this case, the investor stated that they sustained significant financial losses in exchange traded funds and alleged LPL Financial of breach of fiduciary duty, broker negligence, negligent misrepresentation, and more. The FINRA arbitration panel agreed with the investor and awarded them significant financial compensation.
Broker Negligence: Breach Of Fiduciary Duty Complaint Against LPL
On June 19th, 2017, a FINRA arbitration panel in California ruled in favor of an investor against LPL Financial and registered securities representative Cory Burnell (CRD#: 3260340).
In this case, the investor alleged that Burnell, who worked for LPL Financial from 2007 to 2015, was negligent in caused them significant financial losses. The financial products in question in this situation were two highly aggressive exchange traded funds (ETFs) that are not suitable for all investors. The FINRA Arbitration panel agreed with the investor and awarded him $160,000 in financial compensation.
Earlier LPL Financial Complaints
LPL and its brokers have faced multiple claims of misconduct in the past. In 2010, two investors brought a class action lawsuit against the firm. They claimed that Bob Bennie, a broker at the firm, misrepresented the suitability of variable annuities in their retirement accounts. In 2011, FINRA fined LPL Financial $220,000 for failure to enforce its supervisory system, failure to establish, maintain, and enforce a supervisory system, and failure to use reasonable diligence.
In June 2013, Blake Richards, a former Georgia broker from LPL Financial, was accused of defrauding his clients. The Securities and Exchange Commission (SEC) alleged that he stole at least $2 million in investments and took them for personal use. Some of the victims of this stockbroker fraud scheme were elderly.
Also in 2013, many claims were filed over LPL REIT losses. Meyer Wilson launched an investigation into these claims just days after the Commonwealth of Massachusetts, Securities Division filed a lawsuit against LPL Financial over similar practices. REITs are Real Estate Investment Trusts, and in this case, the complaint was over non-traded REITs. These are not traded on a public exchange, so it can be difficult to know the investment’s actual value. In the past, FINRA has warned of the high risks of non-traded REITs.
Complaints against LPL focused on a number of specific non-traded REITs such as Cole Credit Property Trust II and III, Dividend Capital Total Realty, Wells Real Estate Investment Trust II and more. Many LP Financial investors were given potentially misleading information regarding these investments that led to substantial investment losses and consequently, they may be entitled to take legal action.
Do You Have a Complaint Against LPL Financial? How To Recover Losses Against LPL Financial, LLC
Meyer Wilson has extensive experience in representing clients in investor claims such as this. We hold securities brokerage firms such as Linsco/Private Ledger accountable for their misconduct. Our firm represents clients with investor claims in federal and state courts, and in arbitration through The Financial Industry Regulatory Authority (FINRA), the American Arbitration Association (AAA) and private arbitration. Meyer Wilson can also represent international clients bringing legal actions against brokerage firms in the United States through FINRA. Meyer Wilson is a top FINRA arbitration law firm.
If you suffered investment losses because of LPL Financial’s misconduct, contact Meyer Wilson today or submit an online contact form to request a free case review.