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Former Vermont securities director joins LPL as a compliance officer

Apr 4, 2014 @ 12:01 am

By Mark Schoeff Jr.

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A former state securities official has crossed to the other side of the fence to help LPL Financial better monitor its independent financial advisers.

John Cronin, former securities director in the Vermont Department of Financial Regulation, joined LPL as a manager in its home office supervision unit March 24. He will oversee eight supervisor principals working in the Northeastern region of the country.

Last summer, LPL established an internal oversight system for its 13,600 advisers. Those who operate as a single-person office can join a multiperson Office of Supervisory Jurisdiction, or they can transition to home office supervision.

(See also: LPL right to eliminate 'self-supervision')

The firm has suffered several compliance stumbles over the past year and a half.

Last week, the Financial Industry Regulatory Authority Inc. fined LPL $950,000 for supervisory deficiencies related to the sales of alternative investment products.

In March 2013, Finra fined LPL $7.5 million for 35 separate significant e-mail failures.

In December 2012, Massachusetts sued LPL over broker sales practices related to real estate investment trusts.

One of the factors that attracted him to the job is LPL's effort to shore up its compliance function, Mr. Cronin said.

“It puts me in a culture of a firm that recognizes it is on a journey to become more compliant from a regulatory perspective,” said Mr. Cronin, who will work in Burlington, Vt.

“I intend to push and impress views that I believe in — that our job is to serve investors,” he said. “Ultimately, LPL provided a position that was a great fit for me and my skill set and the challenges I was seeking.”

In his previous position, Mr. Cronin, 44, focused on investors as a state regulator. He served as Vermont securities director for more than five years and worked in the Department of Financial Regulation for more than 12 years in total.

Mr. Cronin also was active in the North American Securities Administrators Association Inc., where he was the chairman of the broker-dealer section and headed special projects on continuing education, variable annuities and arbitration.

“John's been a very aggressive regulator for years and years,” said Steve Thomas, director of compliance at Lexington Compliance, a division of RIA in a Box. “He's very passionate about protecting consumers of his jurisdiction and the nation.”

The hiring of Mr. Cronin is a good move for LPL as it enhances its compliance operations, according to Mr. Thomas.

“John certainly has an understanding of what regulators look for,” said Mr. Thomas, a former chief compliance examiner in South Dakota.

“He will be a great asset to them. It's like hiring an IRS audit guy to be your CPA,” Mr. Thomas said.

LPL has reached into the regulatory world before for compliance officials. Last June, it hired David Bergers, former head of the Securities and Exchange Commission's Boston office, as general counsel and managing director for legal and government relations at the firm's holding company, LPL Financial Holdings Inc.

An LPL spokeswoman said that the firm isn't necessarily targeting regulators as it beefs up compliance.

“One of LPL's goals is to build our brand as an employer of choice,” said LPL spokeswoman Betsy Weinberger. “We're going to hire the best talent possible and provide them with the tools and resources to do their best work.”

Mr. Cronin will get a chance to reconnect with his NASAA colleagues next week, when he attends the organization's legislative conference in Washington, where he will be honored for his Vermont service.

So far, his state friends have supported his move to the corporate side.

“I was interested in how the announcement would be received, and it was received very well,” Mr. Cronin said.

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