Sometime this quarter, LPL Financial LLC expects to settle with the Financial Industry Regulatory Authority Inc. a matter related to broker and adviser e-mail surveillance.
The broker-dealer's chief executive, Mark Casady, highlighted the e-mail surveillance issue April 25 in a call with Wall Street analysts who cover the company.
“Turning to the regulatory environment, we self-reported a matter related to e-mail surveillance and production to our principal regulator in 2011,” Mr. Casady said. “Since then, we have been working to implement enhancements to our supervisory systems and procedures related to these e-mail issues,” he said. The discussions with Finra also involve the resolution of potential rule violations, Mr. Casady said, with the belief that the company will settle the matter by the end of June.
Betsy Weinberger, an LPL spokeswoman, said she had nothing to add beyond Mr. Casady's comments.
The e-mail supervision issue is the latest compliance hurdle for LPL.
In February, the Massachusetts Securities Division hit it with a $500,000 administrative fine over the sale of nontraded real estate investment trusts, which involved investors who bought shares of several REITs in violation of state limitations, as well as the company's own rules and procedures. Massachusetts also required LPL to set aside $2 million for potential restitution to investors who bought shares of the REITs.
In its consent order with Massachusetts regulators, LPL admitted to a series of statements of fact around sale of the REITs but neither admitted nor denied allegations of insufficient training and oversight, as well as alleged violations of securities laws.
At the end of last year, Finra fined LPL for failing to maintain supervisory systems and written procedures to ensure the delivery of mutual fund prospectuses. The firm consented without admitting to or denying Finra's findings.
bkelly@investmentnews.com Twitter: @bdnewsguy
