FINRA fines LPL Financial, an independent broker-dealer in the US, $2.75m to resolve charges that it failed to file customer complaints and had an ineffective anti-money laundering programme.
FINRA alleged that for over three years, LPL failed to file or amend brokers’ registration or termination forms to reveal dozens of reportable customer complaints.
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The firm was said to misinterpret the FINRA requirement that a complaint had to have compensatory damages of $5,000 or more to be reported. Instead, the firm implied that it is not required to report a complaint if the customer did not explicitly request compensation.
The firm was also accused of failing to probe unauthorised attempts to access its systems and as a result failing to file over 400 Suspicious Activity Reports (SARs).
FINRA said that these failures were due to a fraud case chart that offered inaccurate guidance to its AML staff.
FINRA executive vice president of department of enforcement Susan Schroeder said: “This case highlights FINRA’s persistent focus on ensuring that firms file with the government and with FINRA information critical to the protection of investors and the public.
“Forms U4 and U5 in particular serve as an essential source of information to the investing public in deciding whether to entrust their assets with a broker.”
LPL agreed to the settlement without admitting or denying the allegations. FINRA considered LPL’s cooperation in the matter while deciding the penalty.
LPL managing director and chief legal officer Michelle Oroschakoff said: “We’ve made significant investments to enhance our AML program at LPL. We’re pleased that FINRA noted our ‘extraordinary cooperation’ in identifying, self-reporting, investigating and remediating these issues thoroughly and promptly.”
