State securities regulators in Alabama and Massachusetts led an investigation into LPL Financial LLC’s (“LPL”) failure to establish and maintain policies and procedures to prevent the sale of unregistered, non-exempt securities. The regulators determined “that LPL offered and sold unregistered, non-exempt securities and failed to reasonably supervise the flow of information to ensure full and proper compliance with state securities registration requirements.”
The task force—formed by NASAA—found that LPL acted negligently in canceling third-party services that would have aided the firm in complying with state securities registration requirements. LPL failed to have checks and balances in place to ensure compliance with state securities rules and laws. LPL also failed to supervise the performance of agents, staff, and employees related to systems operations. The regulators also determined that LPL failed to invest sufficient and appropriate resources in personnel expertise, systems, and operations to adequately comply with state securities laws and rules.
At the close of the investigation, LPL entered into a final consent order with 49 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands and agreed to pay $499,000 to each jurisdiction participating in the settlement. The settlement agreement detailed that LPL will offer to repurchase from investors securities sold since October 1, 2006. Click here for complete information.
Contact our team for assistance in drafting and/or revising written supervisory policies and procedures for your firm to ensure compliance with all relevant regulatory rules and laws.
About Red Oak Compliance Solutions
Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.