FINRA LPL $2.75mn AML Report

On Oct. 30, FINRA fined LPL on complaint-reporting and AML.

  • LPL Financial fined for complaint-reporting and AML failures spanning three years.
  • Violated FINRA Rules 1122, 3110, 3310, 2010, NASD Rule 3010, and the by-laws.

Disclosure of Complaints

  • Firm did not file or amend registered representative forms, to disclose complaints.
  • LPL too narrowly interpreted the requirement, that complaint contain “a claim for compensatory damages of $5,000 or more” to be reported, in its Forms U4 or U5.
  • LPL interpreted complaint did not need reporting, without a compensation request.
  • Even if customer alleged sales practice violation that caused a loss of over $5,000.
  • Or complaint as a whole made clear that the customer was seeking compensation.

AML Reporting

  • LPL did not investigate attempts to get unauthorized access to electronic systems.
  • The attempts should have resulted in a filing of suspicious activity reports (SARs).
  • Failure stemmed from employee 'fraud case chart' giving inaccurate AML guidance.
  • Firm provided AML analysts with flawed internal guidance regarding requirements.
  • Incorrect guidance said firm was not required to investigate cyber-related events
    if client did not incur financial loss or if the attempted intrusion was not completed.
  • Used incorrect $25,000 'harm threshold' to report, when should have used $5,000.
  • As a result, LPL failed to investigate incidents and file over 400 SARs with FinCEN.
  • Lacked a process to review AML referrals made by employees and representatives.


  • Fine $2.75mn; FINRA considered LPL cooperation, undertaking to remedy failings.