Jackson, Miss. (Clarion Ledger) –
Mississippi is set to receive almost half a million dollars from a $26 million multi-state securiaties settlement involving a national wealth management group that had been selling unregistered, nonexempt securities since October 2006.
A consent order on the civil penalties from LPL Financial LLC made the settlement that was reached in May final this week. The settlement involves securities regulators in 52 states and U.S. territories. Mississippi, along with 49 other states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands will receive $499,000 each.
Under the settlement, LPL will offer to repurchase from investors securities held in LPL accounts determined to have been unregistered, non-exempt equity, or fixed-income securities sold since Oct. 1, 2006. Each offer also must include 3 percent simple interest per year.
In July 2017, the North American Securities Administrators Association, of which Mississippi is a member, established a task force with Massachusetts and Alabama as lead states to investigate LPL’s failure to establish and maintain reasonable policies and procedures to prevent the sale of unregistered, nonexempt securities to the company’s customers.
Securities must be registered or meet an exemption from registration, under state law.
Association President Joseph P. Borg said LPL fully cooperated with the task force, according to a news release from the Mississippi secretary of state’s office.
“Firms must be held accountable when they fail to follow state and federal laws designed to protect investors,” Mississippi Secretary of State Delbert Hosemann said in the news release.
No evidence was found of willful, reckless or fraudulent conduct by LPL, according to the news release, but investigators did find the firm failed to maintain adequate systems to reasonably supervise agents, staff and employees. State investigators also determined that LPL failed to maintain books and records necessary to ensure full compliance with state securities registration requirements, and failed to conduct due diligence regarding the retention, use, and subsequent cancelation of certain third-party services.
LPL failed to invest sufficient and appropriate resources in personnel, expertise, systems, and operations to adequately comply with state securities registration statutes, rules, and regulations.
LPL has agreed to a review of the integration of new securities products to assess the firm’s ability to comply with state securities registration requirements applying to the offer and sale of these new products. It also agreed to a similar review of its vendor service protocols.
For more information, visit www.sos.ms.gov/securities or call the Mississippi secretary of state’s Securities Division at 601-359-1334.