A National Securities Arbitration & Investment Fraud Law Firm
LPL Financial is ranked the largest independent broker dealer in the financial services industry in terms of gross revenues and number of financial advisors. LPL Financial has financial advisors located throughout the country, primarily in small branch offices, many reports claim. LPL Financial is faced with supervisory challenges because of the geographic dispersion of a large number of small branch offices. In 1989, LPL Financial was formed through the merger of two small brokerage firms, Linsco and Private Ledger under the name Linsco/Private Ledger. In January 2008, Linsco/Private Ledger Corp. changed its corporate name to LPL Financial, LLC.
Regulatory ViolationsLPL Financial, LLC has been the subject of many regulatory investigations, some which resulted in disciplinary actions by regulators.
Retired Investor Awarded Punitive Damages For Unsuitable Variable Annuity RecommendationsIn February 2005, a NASD arbitration panel awarded $371,938 to a retired investor, including $247,680 in punitive damages for recommendations related to the purchase of a variable annuity. According the arbitration award, the LPL Financial advisor provided unsuitable investment advice related to the allocation of funds within the variable annuity based on the investor’s age, investment experience and financial goals.
LPL Financial Failure to Supervise Sale of Variable Annuity Results in NASD AwardIn December 2005, a NASD arbitration panel awarded $1,344,049 to a retired physician for unsuitable investment advice relating to an LPL Financial advisor’s recommended purchase of a variable annuity. According to the arbitration award, the Claimant’s alleged damages of $1.5 million was the result of breach of fiduciary duty, negligence, failure to supervise and unsuitable investment advice related to investments in mutual funds and a variable annuity.
LPL Financial Advisor Mortgages Widow’s Home For Annuity PurchaseIn June 2012, a LPL Financial advisor agreed to FINRA sanctions including an Offer of Settlement for the recommended investment of $300,000 into a variable annuity funded with a mortgage secured from an LPL Financial, affiliated lender. According to FINRA, the LPL Financial advisor “was aware that customer was not financially capable of purchasing the recommended variable annuity without encumbering her primary residence to obtain funds to invest.” Additionally, the LPL Financial advisor received “a referral fee of $1,225” for orchestrating the mortgage loan for the retired widow in 2006. In 2004, NASD regulators warned brokerage firms through, NTM 04-89, against the recommended use of home equity loans to fund investments. The arbitration panel found that LPL Financial failed to supervise the activities of its financial advisor related to the funding of the variable annuity transaction.
SEC Charges LPL Financial Broker With Securities FraudIn May 2013, the Securities Exchange Commission (SEC) charged a LPL Financial registered broker with misappropriation of customer funds. According to the SEC Complaint, the broker operated a Ponzi scheme which misappropriated “at least $2 million from at least seven investors. The majority of the misappropriated funds constituted retirement savings and/or life insurance proceeds from deceased spouses.” The broker falsified documents on LPL Financial letterhead which purportedly represented investments that were never made upon behalf of the defrauded investors.
Improper Sale of Non-Traded REITs to Massachusetts ResidentsIn February 2013, LPL Financial, LLC was ordered to pay $4.8 million in fines and restitution by Massachusetts attorney general for the improper sale of non-traded real estate investment trusts (REITs) to its residents. According to the Administrative Complaint, many of the transactions reviewed by state regulators, Securities America failed to properly supervise the transaction in customer accounts according to standards established by the state regulations and the brokerage firm’s own compliance rules. Securities America failed to comply with certain income, net worth and securities concentration rules and regulations.
A Multi-State Task Force Charges LPL with Failure to SuperviseOver the course of 2015 and 2016, the North American Securities Administrators Association (NASAA), along with agencies in several states, alleged that LPL failed to supervise its representatives in several areas, including their sale of non-traded REITs. NASAA alleges that the firm, “through its agents, sold non-traded REITS in excess of the REIT’s prospectus standards, various state concentration limits or LPL’s Alternative Investment Guidelines. The investigation also found that LPL failed to implement a supervisory system that was reasonably designed to achieve compliance with state law.”
The firm agreed to a settlement related to “non-traded REITS sold by the firm from January 1, 2008 through December 31, 2013,” as well as agreed to an independent review of all transactions during this period. LPL also agreed to pay $1.425 million in civil penalties to be split among 48 states, Washington, DC, Puerto Rico, and the U.S. Virgin Islands.
LPL and Rep Charged With FraudIn early December of 2016, the top financial regulator in Massachusetts charged the firm – along with one of their Boston-based investment advisers – with fraudulently selling annuities. According to the state complaint, Roger Zullo defrauded clients, lied to supervisors, and fabricated suitability profiles to sell identical high-commission variable annuities in order to enrich himself and his firm. LPL was charged with a failure to supervise.
The complaint said that LPL had a “paper-thin compliance review process” and that the firm didn’t act appropriately. Though his supervisors may not have known what Zullo was doing, the firm was still responsible for his actions. In a civil complaint, Massachusetts Secretary of State William F. Galvin charged Zullo for earning $1.8 million in commissions over a three-year span by mostly selling the same Polaris Platinum annuity to retirees and healthcare workers.
LPL Fined $1.65 Million for Two Major InfractionsIn December of 2016, LPL was the subject of two actions taken by FINRA. First, the firm was censured and fined $900,000 by FINRA for failing to send out to more than 1.6 million customers notices informing them of suitability determinations that had been made over the previous three years. LPL was censured again and fined an additional $750,000 for failing to maintain over 18.3 million electric communications in non-erasable and non-rewritable format.
LPL-Affiliated Advisor is Sent to Prison for Running a Ponzi SchemeCharles Caleb Fackrell was sent to prison for 63 months in December of 2016 for running a Ponzi scheme that brought in $1.4 million. He operated under the aegis of “Robin Hood, LLC,” “Robinhood LLC,” “Robin Hood Holdings, LLC,” and “Robinhood Holdings, LLC.” The LPL-affiliated advisor was ordered to pay back around $820,000 to 20 victims of his scam. According to the U.S. Department of Justice:
“Court records indicate that Fackrell solicited his victim investors by making false and fraudulent representations, including that the investors’ money would be invested in, or secured by, gold and other precious metals, when in fact Fackrell spent only a fraction of investor money on such assets.
According to court records, Fackrell also falsely told victims that Robin Hood was a very safe investment, paying guaranteed annual returns of 5% to 7%. According to court records, contrary to the promises he made to his victims and instead of investing the victims’ funds as promised, Fackrell used the majority of the money to cover personal expenditures, including hotel expenses, groceries, and medical bills, to make purchases at various retail shops and to make large cash withdrawals.”
Fackrell also has to serve three years under court supervision when he is released from prison.
FINRA Fines and Sanctions Against Individual Financial AdvisorsSilver Law Group is a nationally recognized securities and investment fraud law firm with Martindale-Hubbell® Peer Review Ratings™ “AV” rated lawyers that handle all securities arbitration matters on a contingency fee basis. The Law Firm, at no cost to investors will review account activity and account statements to determine whether there was any misconduct, whether there are damages and the legal causes of action. We investigate all sales practice violations, while taking into consideration the investor’s age, investment background, and the relationship between the investor and the brokerage firm and its financial advisor. According to securities industry rules and regulations, unsuitable investment advice, securities concentration, fraudulent misrepresentations and omissions of material facts, breach of fiduciary duty, conflicts of interest, variable annuity switching are among the causes of action that may be available to investors in claims for damages against brokerage firms and their financial advisors in a securities arbitration claim filed with the Financial Industry Regulatory Authority (FINRA). We represent investors in FINRA arbitration claims on a contingency fee basis.
To learn more call us at (954) 755-4799 or Toll Free at (800) 975-4345