LPL Financial Complaints
LPL Financial is an independent broker-dealer headquartered in South Carolina. According to the company website, LPL Financial works with 21,000 financial professionals.
LPL Financial also operates under the following names:
- Linsco Private Ledger Corp
- Waddell & Reed Investments
- Waddell & Reed Financial Advisors
- Private Ledger Financial Services
Can I Sue LPL Financial?
Instead of suing LPL Financial, you will most likely need to recover losses by using FINRA arbitration. Most investment contracts feature “pre-dispute arbitration clauses.” When an investor signs a contract featuring this type of clause, they agree to resolve any disputes through FINRA arbitration rather than suing in civil court. Securities attorneys help investors secure fair settlements and arbitration awards.
LPL Financial Reputation in the Securities Industry
Investors should know that this brokerage firm has 245 disclosures on its record. FINRA has alleged that LPL failed to maintain its required customer reserve – the money the SEC requires brokers have put aside to ensure they can fulfill investor’s withdrawal requests – faced allegations that the firm failed to supervise its brokers, and allegedly overcharged customers for 529 plans.
Provided below is an overview of some of their most recent regulatory actions. You can read the full list of regulatory actions here.
Alleged Customer Reserve Deficiencies
In a regulatory action filed on August 11, 2022, FINRA alleged that LPL failed to maintain a sufficient customer reserve, causing two deficiencies totaling approximately $162 million.
As part of the terms of the Acceptance, Waiver, and Consent (AWC) agreement LPL consented to a fine of $300,000.
Read a copy of the AWC here.
Alleged Overcharging for 529 Plans
Allegedly, the firm did not maintain a system to determine that the waivers were applied to each eligible 529 plan. This allegedly led to LPL overcharging customers. On December 20, 2021, LPL consented to repay customers $982,354 in restitution for the unnecessary front-end sales charges.
Read the full AWC agreement here.
Failure to Supervise
LPL consented to pay $350,000 following allegations that they failed to supervise James Booth and Matthew Clason, both LPL brokers who allegedly misappropriated funds from customers while registered with the firm. FINRA Rule 3110 requires brokerage firms to supervise their brokers to ensure compliance with securities laws.
- James Booth allegedly misappropriated $1.1 million from his clients through an alleged Ponzi scheme. Booth also allegedly generated client account statements with fake investments. He pled guilty to one count of securities fraud in federal court and was sentenced to 42 months in prison.
- Matthew Clason allegedly opened a joint bank account with an LPL customer as part of an alleged scheme to misappropriate funds from an elderly customer. He allegedly misappropriated approximately $668,000, without LPL’s knowledge. Clason pleaded guilty to one count of wire fraud in federal court and was sentenced to 30 months in prison.
Some of these products, like variable insurance, alternative investments, and certain types of exchange-traded funds, could be unsuitably risky for investors. Rules like FINRA Rule 2111 and Regulation Best Interest are designed to protect investors from brokers who might recommend these products for the sake of the commissions.
You can find the full list of these products in the LPL Third Party Compensation and Related Conflicts of Interest form. If you work with LPL, review this list and inquire with your broker about any selling compensation they receive in exchange for their recommendations.
