The New York Times today reported that LPL Financial, an independent broker/dealer with over 13,000 brokers, 6,500 offices and 4.3 million customers is having more and more problems with securities regulators as the company grows.
LPL is now the fourth-largest brokerage firm after Wells Fargo, Morgan Stanley and Merrill Lynch.
According the the NY Times article, LPL’s “low cost model that has aided LPL’s explosive growth has brought with it shortcomings that point to the difficulties regulators face in overseeing far-flung financial advisers.”
It reports that in the last two years state regulators from Illinois, Massachusetts, Montana, Oregon and Pennsylvania have fined LPL for failing to properly supervise the actions of their brokers. We recently reported on LPL’s issues in Massachusetts over non traded REITs.
LPL keeps its overhead low by its franchise like arrangements with brokers, who are independent contractors, rather than employees. The commission split to the broker at LPL is higher leaving less money for compliance per the article.
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