Massachusetts securities regulators fined LPL Financial $1.1 million on Wednesday for failing to properly register financial advisors in the state. The brokerage also failed to timely notify regulators of mandatory reportable misconduct by those brokers, according to a statement from Secretary of the Commonwealth William Galvin.
LPL, the largest independent broker/dealer in the country, agreed to the fine in a consent order, a settlement between two parties without admission of guilt or liability. In addition to the $1.1 million fine, LPL is required to conduct "a thorough review of the company’s policies and procedures," according to the order.
Over the past six years, 651 LPL advisors did some form of business in Massachusetts while not properly registered with the state, a violation of its securities laws. The consent order claims the IBD also failed to notify regulators of almost 800 events during that same period, including customer complaints, criminal events, regulatory actions, bankruptcies, and judgments or liens.
“We continue to enhance our controls around timeliness of regulatory reportings and licensing. This is part of our ongoing focus on effective risk management and compliance practices that protect our advisors and their investors,” LPL spokeswoman Shannon Greene said, in a statement to WealthManagement.com.
Regulators in Massachusetts were keeping a close eye on LPL, which was also the subject of a $26 million nationwide settlement last summer, the result of an investigation by a North American Securities Administrators Association (NASAA) task force.
"I think that this case serves as an example that my Securities Division will continue to closely monitor those who have been found to be conducting securities business in Massachusetts without being registered,” Galvin said in the statement.
Galvin has long been an advocate for a fiduciary standard for both advisors and brokers. Earlier this month, his office announced it was seeking public comments for a state regulation that could set a fiduciary standard of conduct for b/ds operating in that state. Massachusetts' rules would apply a fiduciary standard to any recommendations, advice and the selection of account types. The preliminary comment period will end July 26.
