Regulators fined LPL Financial $2.75 million for complaint-reporting and anti-money laundering issues over a three-year period. The Financial Industry Regulatory Authority said the independent broker-dealer "failed to file or amend registered representatives' Forms U4 or U5 to disclose dozens of reportable customer complaints."
Overall, LPL "too narrowly interpreted the requirement that a complaint contain 'a claim for compensatory damages of $5,000 or more' to be reported," the regulator explained.
According to FINRA, the IBD appears to have thought the phrase implied it did not have to report a complaint that did not "expressly request compensation," even when a client alleged a sales-practice violation caused a loss of $5,000 or more "and the complaint, when viewed as a whole, made clear that the customer was seeking compensation."