Finra fines LPL, four other firms for mutual fund lapses

Sanctions linked to failure to deliver prospectuses over 2-1/2 year period

Jan 2, 2013 @ 3:44 pm

By Dan Jamieson

Finra has fined five firms a total of $770,000 for failure to deliver mutual fund prospectuses.

LPL Financial LLC agreed to pay a $400,000 fine; State Farm VP Management Corp., $155,000; Deutsche Bank Securities Inc., $125,000; Scottrade Inc., $50,000; and T. Rowe Price Investment Services Inc. will pay $40,000.

Officials at the Financial Industry Regulatory Authority Inc. signed off on all the cases Monday.

The sanctions stem from a Finra review covering the period January 2009 through June 2011.

In its settlement agreement, Finra said LPL relied on its brokers to deliver prospectuses, but had no procedures to determine if the documents were delivered late. Over the review period, LPL was required to deliver 3.4 million prospectuses.

State Farm was responsible for delivering 154,129 prospectuses over the period, at first through its brokers and later through a service provider. But in each case the firm had inadequate supervision, Finra alleged.

Scottrade failed to deliver prospectuses in about 14,000 transactions out of 300,000, Finra said.

Deutsche Bank Securities missed delivery in 3,800 cases out of nearly 71,000 trades, according to the settlement.

Finally, T. Rowe Price had 2,500 failures in more than 68,000 transactions.

As is typical in such settlements, the firms involved did not admit to any of the findings.

LPL has migrated to an automated prospectus delivery program, spokeswoman Betsy Weinberger said in a statement.

“This new approach should provide the firm, and its regulators, with clear and consistent records of timely prospectus deliveries, which should avoid future such concerns,” she wrote.

Scottrade spokeswoman Leigh Hamer said in a statement that beginning in May 2011, the brokerage took steps “to ensure our vendor delivers prospectuses in a timely manner to our mutual fund clients.”

T. Rowe Price spokesman Robert Benjamin declined comment, as did Amanda Williams, a spokeswoman for Deutsche Bank Securities.

Attempts to reach a spokesperson at State Farm were not successful.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Why a sabbatical is the perk advisory firms can’t overlook

Financial advice firms offering this benefit praise the impact its had on their businesses.

Latest news & opinion

Finra anticipates oversight role for SEC advice rule

CEO Robert Cook says one area for examination could be the proposed requirement that brokers act in the best interests of their clients.

IBDs with the most CFPs

Here are the 10 independent broker-dealers that employ the most certified financial planner professionals.

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print