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LPL Financial Fined for Trade Order and Execution 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 failing to execute several trade orders fully and promptly, reporting improper data and failing to properly supervise.

The Department of Market Regulation conducted two reviews of LPL Financial in 2012 to examine its trading and reporting methods. During its Trading and Market Making Surveillance (TMMS) review, FINRA found that in four instances, LPL Financial failed to execute orders fully and promptly. During the review, FINRA also found that LPL Financial transmitted to OATS eights reports that contained inaccurate, incomplete, or improperly formatted data. Additionally, the TMMS review found that LPL Financial failed to transmit two Reportable Order Events to OATS and failed to show the correct order receipt time on the memorandum of ten brokerage firms.

The Trade Reporting and Compliance Engine (TRACE) Team of the Department of Market Regulation conducted its second review in June 2012 and found that LPL Financial failed to report 177 S1 transactions in Agency Debt securities within 15 minutes of the time of execution. FINRA alleged that LPL Financial should have reported the transactions and violated FINRA Rule 2010.

LPL Financial had two prior relevant disciplinary suits against them in 2011 with similar allegations. In January 2011 LPL Financial was fined $20,000 for alleged trade execution violations and in July 2011, LPL Financial was fined $22,500 for a pattern or practice of late reporting.

FINRA alleged that LPL Financial violated FINRA Rules 5310, 2010, 7450, and 4511 for all the findings. Without admitting or denying the findings, LPL Financial agreed to the sanctions and was censured and fined $30,000.

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.