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Written by 5:16 am FINRA SEC Sanctions, Securities Fraud Articles

LPL Financial Regulatory History Overview 

LPL Financial Overview featured by top securities fraud attorneys, the White Law Group

The White Law Group reviews the regulatory history of LPL Financial LLC.  

LPL Financial LLC (CRD#: 6413/SEC#: 801-10970,8-17668) the largest independent broker-dealers in the United States, is headquartered in Fort Mill, SC. LPL Financial Holdings Inc. serves nearly 23,000 financial advisers and manages over $1.44 trillion in advisory and brokerage assets as of March 31, 2024.  The firm reportedly has 250 disclosure events on its broker record including 189 regulatory events and 57 arbitrations among others.  

FINRA, the self-regulator that oversees brokers and brokerage firms and the SEC (Securities and Exchange Commission) may impose sanctions such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.  

Arbitration awards are also reported on a firm’s CRD, often related to customer disputes. These awards typically indicate the outcome of arbitration proceedings, which could result in financial compensation for unhappy customers. The presence of multiple arbitration awards against a broker or firm can indicate a history of unresolved customer complaints or poor conduct.  The following is a brief review of publicly available information regarding LPL Financial and its securities sales practices and FINRA regulatory history.  

To view LPL Financial’s full CRD, you can visit FINRA BrokerCheck.

LPL Financial Settles with SEC for Record Keeping Failures

According to reports this week, LPL Financial has reached a settlement in principle with the SEC regarding its recordkeeping of off-channel communications, agreeing to pay a $50 million penalty by June 30. The settlement, subject to SEC approval, follows an investigation into LPL’s compliance with records preservation requirements. The company recorded $40 million in expenses for the penalty in its 2023 financial statements. Similar regulatory actions have been taken against other firms recently. Additionally, Kabir Sethi, LPL’s managing director and chief product officer, departed from the company on March 31, 2024.

LPL Censured & Fined $5.5 Million for Failure to Supervise

December 28, 2023 – FINRA has reportedly penalized LPL Financial LLC, the largest independent broker-dealer in the country, for inadequate supervision of direct business transactions, resulting in inaccurate record-keeping, as stated in the recent Letter of Acceptance, Waiver, and Consent.

FINRA penalized LPL Financial LLC, the largest independent broker-dealer in the U.S., for inadequate supervision of direct business transactions, resulting in inaccurate record-keeping. Between January 2012 and August 2019, LPL failed to ensure accurate reporting of these transactions, leading to around 830,000 unreported transactions. Additionally, LPL neglected to collect necessary customer investment profile information for about two million transactions, affecting suitability assessments.

From February 2016 to June 2020, LPL distributed switch letters with incorrect details about charges incurred when switching securities. FINRA also reported LPL’s failure to establish and enforce a proper supervisory system for recommending publicly traded securities of business development companies from May 2017 to November 2022. As part of the settlement, LPL agreed to a censure, a $5.5 million fine, repayment of $651,374.51 plus interest, and committed to rectifying the issues related to listed BDCs and implementing a supervisory system to ensure compliance with Regulation Best Interest.

FINRA Hits LPL Financial with $3 Million Fine

According to public documents posted on FINRA’s website  on July 10, 2023, the regulator has fined LPL Financial $3 million after two representatives purportedly converted customers funds. 

From May 2018 to August 2020, LPL allegedly failed to establish and maintain a system reasonably designed to supervise the transmittal of customer funds by wire or check to third parties and to respond reasonably to red flags of potential conversion. During this period, two LPL representatives, acting independently of each other, purportedly converted approximately $2.4 million from 13 LPL customers through third-party transfers. This was in violation of FINRA Rules 3110(a) and 2010. Further, from January 2018 through January 2022, the firm also reportedly failed to detect instances of signature forgery or falsification. During this period, at least 50 LPL registered representatives electronically signed another person’s name on over 1,000 LPL documents, including on documents which were required books and records of the firm. One was an electronic forgery on a wire transfer request form in August 2020, which was part of the alleged conversion misconduct.  

The firm has reportedly agreed to sanctions of a $3,000,000 fine, and a censure plus restitution.

The White Law Group Files Claims against LPL Financial

The White Law Group has filed several FINRA claims against LPL Financial representing investors for allegations of unsuitable investments, among others. 

July 2019: The White Law Group filed a FINRA Arbitration claim on behalf of an El Sagundo, CA couple, alleging claims for violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The claim further alleges that LPL Financial LLC unsuitably invested the client in the following high risk alternative investments: LPL Financial Lawsuit Alleges Unsuitable Alternative Investments 

June 2019 The White Law Group filed a FINRA claim, submitted on behalf of a Laguna Niguel, CA resident, alleging violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The claim further alleged that LPL Financial LLC unsuitably invested the client in high-risk oil & gas limited partnership investments. LPL Financial LLC | Lawsuit Filed Today 

May 2019: The White Law Group filed a FINRA arbitration claim against LPL Financial on behalf of two Spearfish, South Dakota investors alleged violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision. The claim further alleged LPL Financial unsuitably invested the clients in high risk alternative investments. LPL Financial Lawsuit Alleges Investment Losses 

LPL Financial: Review of Broker Misconduct and Customer Complaints  

There have been numerous cases of registered representatives employed by LPL Financial who were allegedly involved in broker misconduct and fraudulent activities.  Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim. 

December 2023: The Securities and Exchange Commission (SEC) indefinitely barred Andrew Komarow, a former LPL Financial broker, from engaging in financial activities due to a “free-riding” trading scheme. Komarow was accused of making material misrepresentations to trade $6.9 million that he did not have. In this scheme, he allegedly made unfunded transfers from bank accounts to brokerage accounts and traded unsettled cash to profit, resulting in losses of over $3 million for the brokerages. Komarow reached a partial settlement with the SEC, agreeing not to open any brokerage accounts without providing a copy of the SEC’s court complaint and judgment and is barred from placing trades using unsettled cash. FINRA also barred Komarow in June 2023 for similar allegations. 

February 2023: Former LPL Financial advisor Mario E. Rivero pleaded guilty in federal court in Newark, New Jersey to one count of wire fraud and securities fraud. He faces up to 20 years in prison after allegedly defrauding five clients out of $626,000 to fund gambling and personal expenses. Mario Rivero Jr. Reportedly Pleads Guilty to Fraud 

February 2023: FINRA suspended an LPL advisor in Kewanee, Illinois for allegedly forging customer signatures of five customers, two of whom were seniors. The advisor also exercised discretion in customer accounts without prior written authority from the customers or approval from his firm. 

December 2022: FINRA barred LPL Financial advisor John Terzis (CRD #1805020) after he allegedly borrowing $200,000 from one of his customers, a 69-year-old senior, who had health issues.  Terzis was reportedly registered with LPL Financial in Skokie, Illinois from 2008 until March 11, 2022. He reportedly has two customer complaints on his record.   

November 2022: Another former LPL Financial advisor Brad Goodbred (CRD # 3184210) was reportedly arrested for more than 20 charges of alleged theft after a civil investigation by the SEC. Goodbred, acting as both a financial adviser and financial power of attorney for an elderly victim, allegedly stole funds belonging to his customer between 2012 to 2020. The charges reportedly include 12 felony counts of financial exploitation of an elderly person or person with a disability. Goodbred was reportedly registered with LPL Financial in Roselle, IL from 2009 until January 2021. Ex-LPL Advisor Brad Goodbred Arrested for Theft 

February 2022: Former LPL Advisor from New Bedford, Mass, Paul McGonigle (CRD#: 1220690) was reportedly criminally charged with defrauding elderly advisory clients. McGonigle allegedly made withdrawals from victims’ annuities without authorization and persuaded victims to give him money to invest on their behalf, which he then purportedly used for personal and business expenses. On August 9, 2023, a US District Court judge sentenced broker Paul McGonigle to 54 months in prison and two months of supervised release. McGonigle was also reportedly ordered to pay restitution of $652,987. 

Ex-LPL Advisor James Couture Pleads Guilty to Fraud

September 2022: Former LPL Financial advisor James Couture, of Sutton, Mass reportedly pleaded guilty to four counts of wire fraud, four counts of aggravated identity theft, one count of investment adviser fraud and one count of witness tampering. From 2009 to 2020, Couture allegedly misappropriated $2.8 million from his clients by transferring funds out of his clients’ accounts, investing it in fictitious mutual funds and then selling other clients’ holdings to pay investment returns. He is reportedly serving a prison sentence of 8 years. Ex-LPL Advisor James Couture Pleads Guilty 

July 2019: Former LPL advisor James Thomas Booth, in Norwalk, Connecticut, was sentenced to 42 months in prison after he allegedly perpetrated a multi-million-dollar Ponzi scheme. Booth purportedly solicited money from over 40 clients promising to invest their money in securities offered outside of their ordinary advisory and brokerage accounts.  Instead, he allegedly stole nearly $5 million to pay his own personal and business expenses. 

LPL Financial – More Regulatory Failures 

FINRA and the SEC may impose regulatory actions against financial advisors and broker-dealers such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.  LPL Financial currently has 250 regulatory events indicated by its CRD (broker report). The following is a brief review of a few of LPL Financial’s regulatory failures. 

December 2022: LPL Financial paid $150,000 for allegedly failing to investigate red flags in connection with a representative’s undisclosed business activities. From September 2018 through August 2019, LPL purportedly failed to supervise one of its reps who allegedly caused five LPL customers to transfer $650,000 that  was ultimately converted by a third party.  LPL Financial Sanctioned for Failure to Supervise 

September 2021: The Securities and Exchange Commission settled charges against LPL Financial LLC for anti-money laundering rule violations and for being a cause of certain antifraud violations by an unregistered investment adviser not affiliated with LPL. The firm agreed to pay over $4.1 million for investor losses plus interest and a civil penalty of $750,000. 

December 2020: FINRA censured and fined LPL Financial $6 million for multiple supervisory and compliance failures. The firm allegedly failed to properly retain 87 million records, including customer communications, did not fingerprint at least 7,000 non-registered associated individuals and failed to monitor brokers’ use of consolidated reports, according to the regulator. FINRA Hits LPL Financial with $6M for Supervisory Failures  

December 2016: LPL had to pay $750,000 over allegations that it failed to properly maintain over 18.3 million internal electronic compliance and administrative alerts in a non-erasable and non-rewritable format between December 2010 and November 2015. 

December 2016: LPL was censured and fined again for $900,000 for failing to send customers 1.6 million account notices that are required to be sent to certain customers at 36-month intervals. 

May 2015: LPL Financial reportedly paid a $10 million fine and $1.66 million in restitution for failing to supervise brokers’ use of consolidated reports. This was reportedly in connection with former LPL advisor James Thomas Booth, and his alleged multi-million-dollar Ponzi scheme. 

Failure to Supervise  

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.  

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.  

If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced attorney who is knowledgeable about securities law can greatly increase your chances of success.               

How to Recover Investment Losses    

If you have suffered losses investing with LPL  Financial or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help you by filing a FINRA claim.  To contact the firm, please call 888-637-5510         

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.               

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.                

With over 30 years of securities law experience, including experience working at FINRA and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.                

With offices in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. 



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