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LPL Financial settles with Indiana over failure to supervise allegations

Indiana Secretary of State Connie Lawson today announced she has agreed to a settlement with LPL Financial which includes a civil penalty of $450,000.  The settlement stems from an investigation by the Securities Division of the Secretary of State’s office regarding various deficiencies related to LPL’s supervision of its Indiana operations.

The settlement specifically focuses on email review and branch audit requirements.  Over the past several years, a software glitch caused LPL supervisors to not properly review a select number of emails.  When the Secretary of State’s office uncovered the glitch, LPL was contacted and the glitch was corrected.  The investigation also found that LPL did not conduct annual compliance exams of its Indiana branches as required by law.

“Broker-dealers and financial firms are often the first line of defense against fraud.” said Secretary Lawson. “If a firm does not have, or does not follow its own supervisory procedures, Hoosiers could be at risk.”

In addition to the $450,000 civil penalty, LPL agreed to a conduct a 3rd party compliance review of its policies and procedures in Indiana to ensure that they comply with Indiana law.  LPL will provide a report to the Securities Commissioner in 180 days for review.

“Our office is dedicated to keeping Hoosiers’ money safe, and to that end we will hold firms accountable if they do not establish and enact strong supervisory systems.” said Securities Commissioner Alex Glass.  “The law is clear.  A firm must properly and effectively supervise its business in Indiana.”

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