In yet another chapter of the seemingly constant battle between the largest independent broker-dealer and the most notable state securities regulator, Secretary of the Commonwealth of Massachusetts William Galvin said on Wednesday his office has fined
LPL Financial $1.1 million for its failure to register advisers properly as well as timely file reportable actions or events by the firm's brokers.
The fine was part of a consent order that LPL signed that also requires LPL to review its policies and procedures.
Mr. Galvin has long been a thorn in LPL's side. In December 2012,
he sued the firm over sales practices of brokers regarding nontraded real estate investment trusts. A few months later, LPL agreed to pay $4.8 million in restitution to clients.
In 2017, LPL was ordered by Mr. Galvin's office
to pay up to $3.7 million in restitution and fines to investors as a result of an investigation into sales of unsuitable variable annuities by a former top-producing adviser based in Boston.
Also in 2017, the North American Securities Administrators Association established a task force with Massachusetts and Alabama as lead states to investigate LPL's failure to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, nonexempt securities by LPL to its customers. That led to a $26 million settlement
with the states last year.
In his statement regarding the latest issue with LPL, Mr. Galvin made reference to the firm's history with Massachusetts.
"This is not the first time we have had dealings with LPL, and I think that this case serves as an example that my Securities Division will continue to closely monitor those who have been found to be conducting securities business in Massachusetts without being registered," Mr. Galvin said in a statement.
Over the past six years, LPL had 651 registered reps who were not registered in Massachusetts, in violation of state securities law, according to the order. LPL also failed to give the state timely notice of almost 800 reportable events involving brokers — including customer complaints, criminal events, regulatory actions, bankruptcies and liens.
"We continue to enhance our controls around timeliness of regulatory reportings and licensing," wrote LPL spokesman Jeff Mochal in an email. He did not respond when asked about the persistent actions of Mr. Galvin's office involving LPL, which has more than 16,000 registered reps and advisers.
