The Financial Industry Regulatory Authority (FINRA) imposed a $6.5 million fine on LPL Financials, one of the largest independent broker-dealers in the US. The financial services company failed to establish a supervisory system necessary for record retention and violated NASD Rule 3010 and FINRA Rules 3110 and 2010.
According to the official document, LPL failed to maintain electronic records in the required format and the company did not notify FINRA about changes in the electronic storage media system. FINRA further states that LPL’s failure to keep records in the required format affected at least 87 million records. As a result, over 1.5 million customer communications recorded by a third-party vendor were deleted.
“From January 2014 to September 2019, LPL failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with certain of its record retention obligations, in violation of NASD Rule 3010 and FINRA Rules 3110 and 2010. LPL also failed to send account notices that are required to be sent to customers at 36-month intervals for each account in which a suitability determination had been made (36-Month Letters) to over one million customers,” the official document states.
LPL’s Settlement with FINRA
The financial services company agreed to pay a fine of $6.5 million in order to settle the matter with FINRA. Additionally, the company signed an undertaking to ensure that its supervisory system is designed to achieve the required compliance for record retention.
“Respondent agrees to pay the monetary sanction upon notice that this AWC has been accepted and that such payment is due and payable. Respondent has submitted an Election of Payment form showing the method by which it proposes to pay the fine imposed,” FINRA mentioned.
Finance Magnates earlier reported that LPL Financial agreed to buy Lucia Securities, which is part of a San Diego-based family of companies working in the wealth advice, asset management and investment distribution spaces to increase its assets under management by more than $1.5 billion.
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