LPL Finanical to Pay $9 Million to FINRA-Email Failure and Making Misstatements to Regulators

On May 21, 2013, the Financial Regulatory Authority (FINRA) announced a record $9 million dollar fine has been assessed against LPL Financial significant failures in its email system which prevented access to hundreds of millions of emails.

FINRA provided the following examples of email failures:

  • Over a four-year period, LPL failed to supervise 28 million
    “doing business as” (DBA) emails sent and received by thousands of
    representatives who were operating as independent contractors.
  • LPL
    failed to maintain access to hundreds of millions of emails during a
    transition to a less expensive email archive, and 80 million of those
    emails became corrupted.
  • For seven years, LPL failed to keep and review 3.5 million Bloomberg messages.
  • LPL failed to archive emails sent to customers through third-party email-based advertising platforms.

To make matters worse LPL made material misstatements to FINRA during the investigation of the email problem. FINRA found that LPL likely failed to provide emails  to certain arbitration claimants and private litigants and is required to notify eligible claimants and deposit $1.5 million of the fine in a fund to pay customer claimants for its potential discovery failures. 

Rex Securities Law has been investigating the sales practices of LPL Financial, including its sale of non-traded REITs to investors, for more than a year and currently is representing a number of LPL clients who are seeking recovery of investment losses. If you have questions about losses in your LPL Financial account, contact us for more information.

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