Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on November 1, 2018 indicate that FINRA has sanctioned LPL Financial in connection to allegations the firm violated rules concerning the reporting of customer complaints as well as rules concerning anti-money laundering procedures. Fitapelli Kurta is interested in hearing from investors who have complaints regarding LPL Financial (CRD# 6413).
According to a FINRA release, FINRA found that LPL Financial failed in its duty “to file or amend registered representatives’ Forms U4 or U5 to disclose dozens of reportable customer complaints.” FINRA alleges specifically that the firm made an overly narrow interpretation of a regulatory requirement that firms report any complaint that contains “a claim for compensatory damages of $5,000 or more,” erroneously taking the phrase “to mean that the firm was not required to report any complaint that did not expressly request compensation,” even if the complaint concerned allegations that resulted in losses of $5,000 or more, and a holistic view of the complaint would make clear that the customer sought compensation. FINRA’s findings state that this incorrect interpretation resulted in the failure to report “at least 31 reportable customer complaints alleging sales practice violations,” as well as the failure to timely amend its representatives’ disclosure forms to reflect “at least 149 customer complaints and other reportable events,” such as judgments, bankruptcy filings, employment terminations, and other actions, whether regulatory, civil or criminal.
FINRA also found that the firm had an “unreasonably designed” anti-money laundering program that resulted in a failure to look into “numerous attempts to gain unauthorized access to electronic systems that could have resulted in the filing of Suspicious Activity Reports.” FINRA’s findings state that this failure resulted from LPL’s use of a chart that gave inaccurate guidance to anti-money laundering employees, ultimately resulting in the firm’s failure to file over 400 such reports.