The Florida Office of Financial Regulation today announced that the agency will participate in a settlement with LPL Financial LLC to repurchase from investors certain securities sold since October 2006 and to pay administrative penalties of $499,000 to Florida upon entering the final order.
Interim Commissioner Pamela Epting said, “The Florida Office of Financial Regulation is committed to protecting Floridians and will continue to work with our partners in other states to hold financial services businesses accountable.”
The settlement stems from an investigation led by state securities regulators from Alabama and Massachusetts regarding the failure to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, non-exempt securities by LPL to its customers.
In July 2017, the North American Securities Administrators Association (NASAA), of which the Florida Office of Financial Regulation is a member, 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, non-exempt securities by LPL to its customers. LPL fully cooperated with the NASAA task force.
State securities regulators concluded that LPL offered and sold unregistered, non-exempt securities and failed to reasonably supervise the flow of information to ensure full and proper compliance with state securities registration requirements.
While no evidence was found of willful, reckless, or fraudulent conduct by LPL, investigators did find that the firm failed to maintain adequate systems to reasonably supervise agents, staff, and employees to prevent the sale of unregistered, non-exempt securities. LPL failed to invest sufficient and appropriate resources in personnel, expertise, systems, and operations to adequately comply with state securities registration statutes, rules, and regulations.
In addition to an administrative penalty, the settlement calls for LPL to offer to repurchase from investors securities held in LPL accounts determined to have been unregistered, non-exempt equity or fixed-income securities sold since October 1, 2006. Each offer also shall include 3 percent simple interest per year.