Massachusetts Secretary of the Commonwealth William Galvin has fined LPL Financial (LPLA) $250K to resolve charges that its representatives misrepresented their qualifications when working with older investors. The state’s regulator claims that the brokerage firm approved having brokers use senior-specific titles on their business cards. The titles were not in compliance with the state’s regulations regarding senior designations.
After Galvin’s office discovered one such incident, LPL conducted an internal probe and discovered that at least 10 brokers may have been using titles that were not in compliance with the state’s Senior Designations Regulations. The regulator said that the firm had even approved the title on one broker’s business card more than once.
Galvin contends that since June 2007, LPL failed to establish or enforce a procedure allowing it to look at senior-specific titles to make sure they complied. He noted the importance of not using titles that imply one has an expertise in advising senior investors when there is none. The Senior Designations Regulations prohibit the use of titles that imply a training or certification that the titleholder doesn’t actually possess.
Aside from the $250K fine, LPL consented to a cease and desist order. It will examine its procedures related to senior designations.
It was just last October that LPL paid $541,000 to compensate seniors in Massachusetts for surrender charges they were asked to pay when switching variable annuities. That settlement was over 157 transactions involving investors who were senior citizens.
LPL admitted that certain annuity switch transactions took place without surrender charges being adequately disclosed or determinations not properly documented. The firm has since put into place new policies and procedures to make sure that customers are given the proper and required disclosures regarding transaction fees.
In 2012, Galvin sued the broker-dealer over its brokers’ sales practices related to real estate investment trusts. In that case Galvin accused LPL of the failure to supervise registered representatives who sold nontraded REITS while employing terms that violated not just state limitations but also the firm’s own rules. The brokerage firm paid its clients $4.8M in restitution.
LPL has been dealing with regulatory issues for the last several years. Earlier this month LPL settled with FINRA again. This time the firm agreed to pay over $6.3 million to customers who were affected because the firm did not waive charges for mutual fund sales by eligible retirement and charitable accounts. LPL is the largest independent broker-dealer in the U.S.
Over the years, our stockbroker fraud law firm has made it our job to help senior investors that have sustained losses because of broker mistakes or wrongdoing to recover their money. If you are an investor who suspects your financial losses are due to elder financial fraud, do not hesitate to contact Shepherd Smith Edwards and Kantas, LTD LLP today.
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Read the designation rule, July 14, 2015 (PDF)