LPL Fined for Violations in Selling Alternative Investments

Posted on April 24th, 2014 at 9:00 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

The Massachusetts Securities Division fined LPL Financial $500,000 and ordered LPL to pay $2 million in restitution for selling non-traded REITs to customers that were not qualified for alternative investments.  

Previously FINRA investigated LPL, LPL was fined $950,000 and ordered to review the adequacy of its supervision and compliance over alternative investments, and improve their system.

Between January 1, 2008 and July 1, 2010, LPL failed to have a reasonable supervisory system and procedures to identify whether purchases of alternative investments caused a customer's account to be unsuitably concentrated in alternative investments. In addition, LPL did not adequately train its supervisory staff to appropriately analyze state suitability standards as part of their suitability review.

As a result of these supervisory deficiencies, between January 1, 2008 and July 1, 2012, a sampling of REIT transactions revealed that LPL approved 106 alternative investment transactions in violation of firm, prospectus or state suitability standards.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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