Colorado receives $499,000 from $26 million multi-state settlement with LPL Financial, LLC

DENVER - The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), today announced that as part of a national settlement with LPL Financial, LLC (LPL) to repurchase from investors certain securities sold since October 2006, LPL will pay civil penalties of $499,000 to the state of Colorado. The final order was entered in December 2018 and is part of a multi-state settlement by LPL totaling $26 million.

The state of Colorado will recoup part of the settlement, while the Division of Securities will put $249,000 of the settlement into the state’s Investor Protection Trust to assist in efforts to prevent future harm toward investors in the state.

“This settlement sends a strong message that states across the country hold firms accountable to serve a vital role in protecting investors,” Colorado Securities Commissioner Chris Myklebust said. “Our hope is that this settlement benefits protecting Colorado investors, both past and future.”

The settlement stems from an investigation led by state securities regulators regarding the failure to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, non-exempt securities by LPL to its customers.

State securities regulators concluded that LPL offered and sold unregistered, non-exempt securities and failed to reasonably supervise the flow of information to ensure full and proper compliance with state securities registration requirements.

While no evidence was found of willful, reckless or fraudulent conduct by LPL, investigators did find that the firm failed to maintain adequate systems to reasonably supervise agents, staff and employees to prevent the sale of unregistered, non-exempt securities. State investigators also determined that LPL failed to maintain books and records necessary to ensure full and proper compliance with state securities registration requirements and failed to conduct appropriate and necessary due diligence regarding the retention, use and subsequent cancelation of certain third-party services critical for compliance with state securities registration requirements.

In addition to a civil penalty, the settlement calls for LPL to offer certain requirements, including  repurchasing from investors those securities held in LPL accounts determined to have been unregistered, non-exempt equity or fixed-income securities sold since October 1, 2006. 

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