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LPL Financial Fined for MSRB and FINRA Rule Violations

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 purchasing from and selling municipal securities to customers at prices that were not fair or reasonable.

The Department of Market Regulation conducted two reviews of LPL Financial related to the firm’s compliance with municipal bond fair pricing requirements and corporate bond fair pricing requirements. During the municipal bond review between January and March 2009, FINRA found that for twelve transactions. LPL Financial purchased municipal securities for its own account from a customer and/or sold municipal securities for its own account to a customer at an aggregate price that included and commissions or service charges. FINRA alleged that such actions were not fair or reasonable and did not represent the best judgment of the broker as they didn’t express the fair market value of the securities.

In addition, during The Department of Market Regulations review of LPL Financials corporate bond fair pricing, they found that in five transactions during the review between January and March 2009, LPL Financial failed to use reasonable diligence to ascertain the best inter-dealer market. FINRA also alleged that LPL Financial failed to buy and sell in the market so that the resulting price was favorable as possible for their customers given market conditions.

FINRA alleged that LPL Financial violated Municipal Securities Rulemaking Board (MSRB) Rules G-17 and G-30 as well as FINRA Rule 2010 and NASD Rule 2320. Without admitting or denying the findings, LPL Financial agreed to the FINRA sanctions and was censures and fined $60,000.

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.