Massachusetts fines LPL $1 million for failure to supervise advisers at credit union

Says advisers working at a credit union misled investors on how they were paid

May 4, 2017 @ 2:17 pm

By InvestmentNews

The Massachusetts Securities Division has fined LPL Financial $1 million for failing to supervise its financial advisers who operated out of the Digital Federal Credit Union.

The agents, who were dual employees and worked under the name DCU Financial, allegedly participated in securities sales contests to earn annual cash bonuses paid by the credit union, received other credit union bonuses based on commissions and used business cards that were inconsistent and confusing, the securities division said in a release.

The division also said that when one of its mystery shoppers visited the credit union, they were told that representatives there were paid by the credit union and did not receive commissions, which was not true.

The division also alleged that LPL allowed those agents to use a "doing business as" name that essentially was the same as that of the credit union.

In its settlement, LPL was censured and ordered to cease and desist from violating the Massachusetts securities law. It also agreed to remove DCU from its business name on the credit union's premises.

In response to the Massachusetts action, LPL issued the following statement: "LPL has made a long-term commitment to enhancing our risk management and compliance structures. We are pleased to have resolved this matter with the Massachusetts Securities Division."


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