LPL Updates its Employment Agreement to Claw Back Commissions from Registered Representatives for Sales Violations 

Posted on December 16th, 2017 at 8:29 AM
LPL Updates its Employment Agreement to Claw Back Commissions from Registered Representatives for Sales Violations 

According to its newly issued revised employment agreement, LPL Financial now has given itself the purported right to claw back commissions from its registered representatives if they commit sales practice violations.

More specifically, as indicated in the first page of the 13-page agreement, the language states that, “LPL further reserves the right to withhold, capture or offset all or a portion of any Commission payments if a transaction is in violation of applicable law or LPL policy.”  

LPL also has inserted a clause in its revised employment agreement which places a two-month time limit on a rep’s ability to challenge his or her commission payouts. The new clause requires reps to notify LPL within 60 days of a transaction if the rep believes his or her payouts were incorrectly calculated. In previous employment agreements, no such time limits existed. 

The language in the revised contract likely will be significant for reps because LPL has absorbed more than $75 million in fines and restitution over sales practice violations from 2014 to 2016.

Related Attorneys: James J. Eccleston

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