Linsco/Private Ledger/LPL Financial Services
LPL Bartered Client Trades for Mutual Fund Benefits
The NASD fined Linsco/Private Ledger $3.6 million for directing brokerage transactions of its clients in exchange for preferential treatment from mutual fund companies. Brokerage firms are required to seek “best execution” for their clients when making trades and bartering such orders violates this rule and gives rise to improper “self-dealing.” “When recommending mutual fund investments, firms must act on the basis of merits of the funds and the investment objectives of the customers and not because of other benefits the brokerage firm will receive.”
LPL Fined Over Broker Disclosure Violations
The NASD censured and fined Linsco/Private Ledger for failing to timely make required disclosures about customer complaints. Such disclosures must be made within 30 days. But a number of disclosures were years late or not made at all. The investigation resulted in censures and fines totaling $9.2 million against 29 firms, including LPL.