LPL Financial failed to pay commissions to a large portion of its 14,000 registered reps and advisers on Thursday due to an error in sending money directly into their bank accounts.
“We have identified an operational processing issue that affects the payment of your commission today through ACH direct deposit,” wrote LPL president Robert Moore in a memo to advisers.
“I want to personally assure you that all funds are available for payment and will post” on Friday, the memo from Mr. Moore said.
(More: CEO Mark Casady apologizes to LPL Financial shareholders for compliance missteps)
When asked how many LPL advisers use direct deposit to get their commissions, spokesman Brett Weinberg declined to comment. He also declined to comment about the specific steps taken to correct this problem. Mr. Weinberg confirmed that LPL's advisers were paid on Friday.
A large, public brokerage firm failing to pay its advisers' commissions on time was very unusual, said one industry observer.
“I can't remember that happening but I'm curious about communication around that. When did LPL let people know? On Wednesday, before it occurred, or when it hit on Thursday?”
“If it was just advisers getting commissions it's not a big deal,” said Danny Sarch, an industry recruiter with Leitner Sarch Consultants. “The company does a mea culpa and then moves on.”
(More: Firms pumping millions into their compliance departments to keep regulators at bay)
Mr. Moore said that if any advisers were to incur fees or expenses due to the processing error, LPL would reimburse them.
“We understand the significance of this issue and apologize for the disruption,” he wrote. The company was taking steps to ensure that future transfers of funds occur on the scheduled date, according to Mr. Moore's memo.
Before it became a publicly listed company in November 2010, LPL had a handful of technology glitches that affected its advisers and clients. In February 2010, an unencrypted portable hard drive was
stolen from the car of an LPL rep, putting private client information at risk. In 2007, the company reported that computer hackers had
compromised the login passwords of 14 financial advisers and four assistants.
