The office of Massachusetts Secretary of the Commonwealth William Galvin has fined LPL Financial (LPLA) $1M because the firm’s financial advisers allegedly made misrepresentations to consumers. According to the state regulator, the brokerage firm, which is based in Boston, failed to properly supervise its advisers located at Digital Federal Credit Union (DCU) branches.
LPL financial advisers are allowed to work out of the DCU in return for part of the concessions. However, noted Galvin’s office, the problem was that LPL’s advisers conducted their business as DCU Financial, a reference that could have cause customers to think that they worked for the credit union.
The Massachusetts regulator said that an undercover sting operation was put into place, during which time one LPL adviser allegedly claimed to work for DCU and said that he was not paid commissions for offering investment advice, which was a false statement. Also, DCU paid these advisers bonuses in a sales contest that LPL never authorized.