An investigation by the Securities Division at the Indiana Secretary of State’s office has resulted in a settlement under which the nation’s largest independent broker-dealer has agreed to pay a civil penalty of $450,000.
The investigation related to LPL Financial’s supervision of its Indiana operations. The settlement focuses on email review and branch audit requirements, Indiana Secretary of State Connie Lawson said in a statement.
The office uncovered a software glitch, which it said caused LPL supervisors to not properly review a select number of emails. The glitch was corrected after the office contacted LPL about it. The office said the investigation also found LPL had failed to conduct legally required annual compliance exams of its Indiana branches.
“Broker-dealers and financial firms are often the first line of defense against fraud,” Lawson said in the statement. “If a firm does not have, or does not follow its own supervisory procedures, Hoosiers could be at risk.”
In addition to the civil penalty, LPL agreed to conduct a third party compliance review to ensure its policies and procedures in the state comply with Indiana law, she said.
“Our office is dedicated to keeping Hoosiers’ money safe, and to that end we will hold firms accountable if they do not establish and enact strong supervisory systems,” Securities Commissioner Alex Glass said in the statement. “The law is clear: A firm must properly and effectively supervise its business in Indiana.”
LPL has operations in Fort Wayne. It will provide a report within 180 days to the commissioner for review, the statement said.