LPL Hit With $2.75M FINRA Fine Over Cyber Infractions

The shortcomings of the firm and its laxness related to detecting, investigating and reporting suspicious cyber activity spanned a period of more than three years, from at least Jan. 1, 2013 through May 31, 2016, according to FINRA.

During this time, LPL failed to establish and implement an AML program reasonably designed to detect and cause the reporting of suspicious activity, including cyber-related events, FINRA said.

Over this time period, LPL's AML analysts used inaccurate internal guidelines to determine whether to investigate cyber-related events and to file a SAR.

So far, the cyber events appear to be unsuccessful, according to the FINRA consent order.

"This case highlights FINRA's persistent focus on ensuring that firms file with the government and with FINRA information critical to the protection of investors and the public," stated Susan Schroeder, a FINRA's Department of Enforcement top executive in a press release Oct. 30. She noted that Forms U4 and U5 are important as a source of information to the investing public when they determine the trustworthiness of a broker-dealer.

Despite the many issues uncovered at the firm, LPL gave FINRA extraordinary cooperation its investigation and made remedies, according to the agency. This was a factor in determining the monetary sanction, FINRA said, suggesting it could have been more.

LPL neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

— Check out How Dan Arnold Is Driving Change at LPL on ThinkAdvisor.