LPL Financial LLC (LPLA), the largest independent U.S. broker-dealer by revenue, was accused by Massachusetts regulators today of dishonest and unethical business practices and failure to supervise agents who made improper sales.
The complaint relates to sales of seven non-traded real estate investment trusts in violation of state and company rules, according to a statement from the state’s senior securities watchdog, Secretary of the Commonwealth William F. Galvin. LPL earned at least $1.8 million in commissions on the sales from 2006 through 2009, the state said.
“At their core, non-traded REIT products operate through an immensely complex affiliated and subsidiary structure rife with conflict,” Galvin’s complaint said. “LPL’s lack of adequate training and supervision only exacerbated problems.”
LPL, which is based in Boston, provides brokerage, advisory and technology services to more than 13,000 financial advisers, according to its website. San Francisco-based Hellman & Friedman and TPG Capital, the Fort Worth, Texas-based firm founded by David Bonderman, are the company’s largest shareholders, according to data compiled by Bloomberg.
“We believe the claims included in the complaint are substantially overstated,” Betsy Weinberger, a spokeswoman for LPL, said in an e-mailed statement. “LPL Financial takes protection of investors’ interests seriously.”
The complaint seeks a cease-and-desist order, censure and restitution for investors.
To contact the reporter on this story: Christopher Condon in Boston at firstname.lastname@example.org
To contact the editor responsible for this story: Christian Baumgaertel at email@example.com