FINRA recently fined LPL Financial (CRD #6413) for failing to disclose customer complaints and for failures in the firm’s anti-money laundering (AML) program.
A misunderstanding with FINRA’s rule caused LPL to ignore dozens of customer complaints. The firm incorrectly failed to file and/or update registered representatives U4 or U5 forms to disclose dozens of reportable customer complaints that should have been filed. These claims requested compensatory damages of $5,000 or more. A representative for FINRA stated, “LPL incorrectly construed this phrase to mean that the firm was not required to report any complaint that did not expressly request compensation, even when the customer alleged a sales practice violation that caused a loss of $5,000 or more, and the complaint, when viewed as a whole, made clear that the customer was seeking compensation.” LPL has been the subject of multiple customer complaints frequently filed as securities arbitration claims, claiming significant damages.
LPL also failed to file suspicious activity reports related to its AML program. Because of inaccurate guidance in the firm’s internal processes, including a “fraud case chart,” employees failed to investigate unauthorized attempts to access customer accounts. More than 400 “hacking” attempts of customer accounts went unreported.
A previous AML failure cost LPL $11.7 million when LPL’s system didn’t generate warnings about excessive withdrawals from ATMs.
The firm has since updated and improved both their AML and their internal reporting processes. LPL neither admitted nor denied the charges and consented to the entry of FINRA’s findings.
LPL provides comprehensive clearing services, proprietary technology, training and programs for practice management and independent research to more than 16,000 financial advisors and 700 financial institutions.
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. Most cases handled on a contingent fee basis. This means that you won’t pay legal fees unless we are successful. Call us toll free at 800-975-4345, or use our online contact form to get in touch. Silver Law Group represents investors in LPL securities arbitration claims.