LPL facing SEC investigation into unapproved personal devices

LPL facing SEC investigation into unapproved personal devices
LPL's disclosure follows a crackdown by US regulators on financial firms' failure to monitor employee communications on messaging apps.
MAR 01, 2023

LPL Financial said the Securities and Exchange Commission had made inquiries into whether the broker-dealer was meeting industry standards related to retaining with electronic communications on personal devices unapproved by the giant brokerage, according to an LPL filing Feb. 23 with the SEC.

According to LPL Financial's annual audited financial statement, called a Focus Report, there's no indication whether the personal devices are those of the more than 20,000 registered reps and investment advisors registered with the firm.

But one financial advisor, who asked not to be named, said that at a meeting LPL held in the fall with its advisors, it focused on texting messages.

"Obviously, it's on the SEC's radar," the advisor said.

InvestmentNews reported last year that unmonitored messaging apps were cropping up quickly at wealth management firms as advisors returned to office life in the wake of the Covid-19 pandemic and reshaped how they interacted with colleagues and clients.

Indeed, apps like WhatsApp and email platforms like Gmail are beginning to play an oversized role in advisor communications, a trend that could increase as more clients choose to communicate via their smartphones. 

A spokesperson for LPL Financial did not respond to requests for comment.

The term "personal devices" typically indicates mobile phones, smart phones, tablets and laptops.

"In October 2022, [LPL Financial] received a request for information from the SEC in connection with an investigation of the company's compliance with records preservation requirements for business-related electronic communications stored on personal devices or messaging platforms that have not been approved by the company," according to the Focus Report.

LPL said in the filing that it intended to cooperate with the SEC in the matter and that it could not estimate a possible loss related to the inquiry at this time.

Bloomberg News reported in May that the SEC was reviewing mobile phones carried by top traders and deal-makers in the largest-ever probe into clandestine messaging on platforms such as WhatsApp.

And in September, the SEC and the Commodity Futures Trading Commission reached settlements with more than a dozen banks in a sprawling probe into financial firms' failure to monitor employees' communications on unauthorized messaging apps, bringing total penalties in the matter to more than $2 billion. 

Market volatility not stopping massive shift from open-end mutual funds to ETFs

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave