FINRA's Year-End Enforcement Blitz: LPL Financial and Interactive Brokers Face Major Penalties
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority Inc. (FINRA) concluded the year with significant penalties against two major firms, LPL Financial and Interactive Brokers.
InvestmentNews reports that LPL Financial settled with FINRA on December 27, agreeing to a $6.15 million settlement concerning its inadequate supervision of thousands of transactions conducted by financial advisors and brokers from 2012 to 2019 with product sponsors, termed as "direct" business in the industry. LPL agreed to pay a $5.5 million fine and $651,000 in restitution to clients without admitting or denying FINRA's findings.
Similarly, Interactive Brokers, specializing in equities and options trading, reached a $3.5 million settlement with FINRA on December 22 for failing to meet best execution and supervision standards from 2014 to 2021.
InvestmentNews opines that FINRA's end-of-year enforcement actions are not uncommon, often driven by the firms involved. In LPL's case, FINRA highlighted the firm's failure to ensure the reporting of direct transactions and supervision lapses in various areas, including inaccuracies in client communications regarding security switching charges and recommendations of traded business development companies from 2017 to 2022. Those settlements underscore FINRA's commitment to enforcing compliance and protecting investors within the securities industry.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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