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LPL Financial Fined for Failing to Comply with MSRB and TRACE Requirements

The Department of Market Regulation of the Financial Industry Regulatory Authority (FINRA) received a Letter of Acceptance, Waiver and Consent (AWC) from LPL Financial LLC (LPL Financial) for allegedly failing to report securities transactions and failing to show the correct time of execution of several brokerage orders.

The Department of Market Regulation conducted two reviews on LPL Financial in 2010 regarding the firm’s compliance with Municipal Securities Rulemaking Board (MSRB) and Trade Reporting and Compliance Engine (TRACE) requirements.

Between July and September 2010, FINRA found that LPL failed to report information regarding 265 purchase and sale transactions related to municipal securities to the Real-time Transaction Reporting System (RTRs). Rule G-14 states that firms must report information regarding municipal securities transactions within 15 minutes of Time of Trade to an RTRS Portal. The Department of Market Regulation also found that LPL Financial failed to show the proper time of execution on the memorandum of 77 brokerage orders in violation of MSRB Rule G-8.

In addition, during a review period between October and December 2010, FINRA found that LPL Financial failed to report to TRACE 113 S1 transactions in TRACE-eligible Agency Debt securities within 15 minutes of the time of execution. Such conduct would be violation of 6730 and 2010.

LPL Financial is a brokerage and investment advisory firm with a principal place of business in Boston, Massachusetts. LPL Financial has been conducting securities business related activities since 1973. LPL Financial has over eighteen thousand registered representatives operating from nearly eleven thousand branch office locations. LPL Financial had a previous disciplinary suit against them in March 2008 for alleged late reporting and failed supervisory procedures.

Without admitting or denying the findings, LPL Financial agreed to the sanctions and was censured and fined $17,500 for the alleged violations.

Stockbrokers have been known to engage in many types of practices which violate industry and firm rules, practices, and procedures. In order to protect customers from stockbroker misconduct, FINRA rules require broker-dealers like LPL Financial to not only establish and implement a reasonable supervisory system but enforce their rules, policies and procedures. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the firms, such as LPL Financial own policies and procedures. If broker dealers and/or their supervisors do not establish, implement and enforce these protective measures, they may be liable to investors for damages which flow from the misconduct. As a result, investors who have suffered losses because of their stockbroker’s unlawful or prohibited conduct can file a claim to recover damages against broker dealers like LPL Financial, which should consistently oversee its employees in order to prevent stockbroker misconduct.

Have you suffered losses in your LPL Financial investment account due to your stockbroker’s misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and prohibited conduct.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.