LPL North American Securities Administrators Association

LPL Settlement Structure with North American Securities Administrators Association

May 02, 2018

LPL Financial

Today, the North American Securities Administrators Association (NASAA) announced a settlement structure with us related to our compliance with “blue sky” laws. In announcing this agreement, NASAA is representing a coalition of 52 U.S. states and territories, each of which is expected to enter separate administrative orders against the firm, tracking the terms announced by NASAA today.

As part of the agreement, LPL will pay a fine in the amount of $499,000 to each of the 52 U.S. states and territories, or $26M if all ultimately participate. At this time, the state of California has not agreed to participate in the settlement.

The agreement relates to our obligation to maintain appropriate controls to prevent the sale of certain equity and fixed income securities that may not be properly registered in each state. The impacted transactions in this matter reflect a small part of our business; the vast majority of investments offered and sold through LPL – like most exchange-listed stocks, mutual funds, insurance, and annuities – are not at issue in this settlement.

We will work with our regulators and an independent, third-party reviewer to analyze historical equity and fixed income purchases dating back to October 2006 to identify any that require remediation. We expect that it will take several years to complete these undertakings.

“We take our compliance and risk management obligations seriously and will continue to dedicate resources to this important work moving forward,” said Dan Arnold, president and CEO, LPL Financial. “We believe these resources, combined with additional expertise we’ve hired in the field of blue sky compliance, position us well with respect to this issue in the future. Our focus now is on offering remediation to investors who may have been affected.”