LPL FINANCIAL LLC · LPL FINANCIAL LLC Report #56910-64536, data current as of Tuesday, September 15, 2015. Section Title Report Summary Firm History CRD# 6413 1 11 Firm Profile 2

BrokerCheck Report

LPL FINANCIAL LLC

Report #56910-64536, data current as of Tuesday, September 15, 2015.

Section Title

Report Summary

Firm History

CRD# 6413

1

11

Firm Profile 2 - 10

Page(s)

Firm Operations 12 - 20

Disclosure Events 21

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LPL FINANCIAL LLC

CRD# 6413

SEC# 8-17668

Main Office Location

75 STATE STREET, 24TH FLOORBOSTON, MA 02109Regulated by FINRA Boston Office

Mailing Address

75 STATE STREET, 24TH FLOORBOSTON, MA 02109

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

617-423-3644

http://www.adviserinfo.sec.gov

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 55

Arbitration 50

Bond 4

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in California on 11/15/2010.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 17 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm does not have referral or financialarrangements with other brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 53 U.S. states and territories

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1©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.

http://www.adviserinfo.sec.gov/IAPD/Content/Search/iapd_Search.aspx?CrdNumber=6413


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This firm is classified as a limited liability company.

This firm was formed in California on 11/15/2010.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.

LPL FINANCIAL LLC

SEC#

6413

8-17668

Main Office Location

Mailing Address

Business Telephone Number

Doing business as LPL FINANCIAL LLC

617-423-3644

Regulated by FINRA Boston Office



Other Names of this Firm

Name Where is it used

LPL AK, AL, AR, AZ, CA,CO, CT, DC, DE, FL,GA, HI, IA, ID, IL, IN,KS, KY, LA, MA, MD,ME, MI, MN, MO,MS, MT, NC, ND, NE,NH, NJ, NM, NV, NY,OH, OK, OR, PA, PR,RI, SC, SD, TN, TX,UT, VA, VT, WA, WI,WV, WY






LPL FINANCIAL AK, AL, AR, AZ, CA,CO, CT, DC, DE, FL,GA, HI, IA, ID, IL, IN,KS, KY, LA, MA, MD,ME, MI, MN, MO,MS, MT, NC, ND, NE,NH, NJ, NM, NV, NY,OH, OK, OR, PA, PR,RI, SC, SD, TN, TX,UT, VA, VT, WA, WI,WV, WY





This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

LPL HOLDINGS, INC.

MANAGING MEMBER

75% or more

No

Domestic Entity

04/1989

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


ARNOLD, DAN HOGAN JR

PRESIDENT

Less than 5%

No

Individual

03/2015

Yes

2557410



Position


Position Start Date

BERGERS, DAVID PAUL

MANAGING DIRECTOR, LEGAL AND GOVERNMENT RELATIONS; DIRECTOR

Less than 5%

Individual

08/2013

6238852








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


CASADY, MARK STEPHEN

CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

Less than 5%

No

Individual

12/2005

Yes

2313239



Position



Position Start Date


FETTER, VICTOR PETER III

MANAGING DIRECTOR, CHIEF INFORMATION OFFICER

Less than 5%

No

Individual

12/2012

Yes

6147410



GOOLEY, THOMAS ANDREW

4526760








Firm Profile

Position



Position Start Date


MANAGING DIRECTOR, SERVICE, TRADING & OPERATIONS

Less than 5%

No

Individual

07/2015

Yes

4526760


Position



Position Start Date


KALBAUGH, JOHN ANDREW

MANAGING DIRECTOR AND PRESIDENT, INSTITUTION SERVICES

Less than 5%

No

Individual

03/2015

Yes

1821773



Position


Position Start Date


LARSEN, SALLIE REBECCA

MANAGING DIRECTOR, CHIEF HUMAN CAPITAL OFFICER

Less than 5%

Individual

05/2012

Yes

6061146









Firm Profile



No

Yes

Position



Position Start Date


LUX, THOMAS DOMINIC

EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER

Less than 5%

No

Individual

03/2015

Yes

2778800



Position



Position Start Date


MIDDLEMISS, PAUL

EXECUTIVE VICE PRESIDENT, CHIEF COMPLIANCE OFFICER, ADVISORY

Less than 5%

No

Individual

05/2011

Yes

2069562



MORRISSEY, WILLIAM PAUL JR

Individual

1575389









Firm Profile

Position



Position Start Date


MANAGING DIRECTOR AND PRESIDENT, INDEPENDENT ADVISORSERVICES

Less than 5%

No

Individual

03/2015

Yes


Position



Position Start Date


OROSCHAKOFF, MICHELLE

MANAGING DIRECTOR, CHIEF RISK OFFICER; CHIEF COMPLIANCEOFFICER, BROKERAGE

Less than 5%

No

Individual

06/2015

Yes

2403199



Position


Position Start Date


PARKER, RYAN CHRISTOPHER

MANAGING DIRECTOR, INVESTMENT AND PLANNING SOLUTIONS

Less than 5%

Individual

06/2014

Yes

2921779









Firm Profile



No

Position



Position Start Date


SCHOTT, MARY FRANCES

MANAGING DIRECTOR, CLIENT EXPERIENCE AND TRAINING

Less than 5%

No

Individual

06/2014

Yes

1453429



Position



Position Start Date


WHITE, GEORGE BURTON

MANAGING DIRECTOR, CHIEF INVESTMENT OFFICER, RESEARCH

Less than 5%

No

Individual

11/2007

Yes

3057759








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

LPL FINANCIAL HOLDINGS INC.

PARENT COMPANY

LPL HOLDINGS, INC.

75% or more

Yes

Domestic Entity

12/2005

Yes



Company through whichindirect ownership isestablished

Relationship to Direct Owner

Relationship Established









Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

11/15/2010Date of Succession:

This firm was previously:

Predecessor SEC#:

LPL FINANCIAL CORPORATION

8-17668

6413Predecessor CRD#:

Description LPL FINANCIAL LLC ASSUMED ALL ASSETS AND LIABILITIES OF LPLFINANCIAL CORPORATION. THE CHANGE TO AN LLC RESULTED IN NOCHANGES TO OWNERSHIP OR CONTROL.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 53 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

Yes

No

No

Federal Regulator Status Date Effective

SEC Approved 08/10/1973

Self-Regulatory Organization Status Date Effective

FINRA Approved 02/16/1973






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 01/11/1983

Alaska Approved 08/11/1983

Arizona Approved 11/03/1978

Arkansas Approved 03/07/1983

California Approved 09/28/1973

Colorado Approved 02/01/1983

Connecticut Approved 06/09/1983

Delaware Approved 10/06/1981

District of Columbia Approved 10/10/1981

Florida Approved 04/27/1983

Georgia Approved 09/22/1981

Hawaii Approved 02/24/1986

Idaho Approved 06/24/1980

Illinois Approved 07/15/1980

Indiana Approved 10/21/1981

Iowa Approved 07/14/1983

Kansas Approved 04/08/1982

Kentucky Approved 07/16/1982

Louisiana Approved 04/20/1983

Maine Approved 02/14/1984

Maryland Approved 10/03/1981

Massachusetts Approved 07/31/1981

Michigan Approved 02/03/1983

Minnesota Approved 07/15/1982

Mississippi Approved 01/13/1983

Missouri Approved 07/18/1983

Montana Approved 04/20/1983

Nebraska Approved 09/21/1982

Nevada Approved 07/18/1983

New Hampshire Approved 02/02/1983

New Jersey Approved 07/14/1983

New Mexico Approved 10/07/1981

New York Approved 06/10/1983

U.S. States &Territories

Status Date Effective

North Carolina Approved 07/15/1982

North Dakota Approved 10/17/1983

Ohio Approved 07/16/1982

Oklahoma Approved 07/17/1982

Oregon Approved 10/24/1981

Pennsylvania Approved 11/06/1980

Puerto Rico Approved 10/26/1994

Rhode Island Approved 04/13/1983

South Carolina Approved 10/28/1981

South Dakota Approved 07/15/1982

Tennessee Approved 08/17/1981

Texas Approved 07/25/1983

Utah Approved 04/21/1983

Vermont Approved 02/13/1984

Virgin Islands Approved 04/01/2005

Virginia Approved 10/01/1981

Washington Approved 05/05/1983

West Virginia Approved 03/16/1983

Wisconsin Approved 03/04/1982

Wyoming Approved 02/24/1982






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does effect transactions in commodities, commodity futures, or commodity options.This firm does engage in other non-securities business.

Non-Securities Business Description: 13B LPL FINANCIAL LLC IS A GENERAL AGENT FOR LIFE ANDDISABILITY INSURANCE.LPL FINANCIAL LLC TRANSACTS BUSINESS AS AN INTRODUCINGBROKER, TRADING ON A FULLY-DISCLOSED BASIS FOR ITSCUSTOMERS IN COMMODITIES, COMMODITY FUTURES, ANDCOMMODITY OPTIONS THROUGH ADM INVESTOR SERVICES, 1610ABOARD OF TRADING BLDG., 141 WEST JACKSON BLVD., CHICAGO, IL60604.

This firm currently conducts 17 types of businesses.

Types of Business

Exchange member engaged in exchange commission business other than floor activities

Broker or dealer retailing corporate equity securities over-the-counter

Broker or dealer selling corporate debt securities

Underwriter or selling group participant (corporate securities other than mutual funds)

Mutual fund retailer

U S. government securities broker

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Solicitor of time deposits in a financial institution

Broker or dealer selling oil and gas interests

Put and call broker or dealer or option writer

Investment advisory services

Broker or dealer selling tax shelters or limited partnerships in primary distributions

Trading securities for own account

Private placements of securities

Broker or dealer involved in a networking, kiosk or similar arrangment with a: bank, savings bank or association, orcredit union

Other - LPL FINANCIAL LLC IS AN SEC-REGISTERED INVESTMENT ADVISOR AS WELL AS AFINRA-REGISTERED BROKER/DEALER. THE PRINCIPAL BUSINESS ADDRESS AND CONTROL PERSONSWITH RESPECT TO THE ADVISORY ACTIVITIES OF LPL FINANCIAL LLC ARE THE SAME AS THEBROKER/DEALER ADDRESS AND CONTROL PERSONS. LPL FINANCIAL LLC IS ALSO REGISTERED AS ATRANSFER AGENT WITH THE SEC.






BROKER, TRADING ON A FULLY-DISCLOSED BASIS FOR ITSCUSTOMERS IN COMMODITIES, COMMODITY FUTURES, ANDCOMMODITY OPTIONS THROUGH ADM INVESTOR SERVICES, 1610ABOARD OF TRADING BLDG., 141 WEST JACKSON BLVD., CHICAGO, IL60604.





Firm Operations

Clearing Arrangements

This firm does hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does not refer or introduce customers to other brokers and dealers.






Firm Operations

Industry Arrangements

This firm does not have books or records maintained by a third party.

This firm does not have accounts, funds, or securities maintained by a third party.

This firm does not have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

Yes

No

No

04/23/2012

4828 PARKWAY PLAZA BLVD.CHARLOTTE, NC 28217

FORTIGENT STRATEGIES COMPANY, LLC is under common control with the firm.

LPL FINANCIAL LLC AND FORTIGENT STRATEGIES, LLC ARE UNDERCOMMON CONTROL. FORTIGENT HOLDINGS COMPANY, INC. IS THEHOLDING COMPANY FOR FORTIGENT STRATEGIES, LLC. FORTIGENTHOLDINGS COMPANY, INC. AND LPL FINANCIAL LLC ARE BOTHWHOLLY-OWNED SUBSIDIARIES OF LPL HOLDINGS, INC.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

No

No

No

04/23/2012


FORTIGENT HOLDINGS COMPANY, INC. is under common control with the firm.

LPL FINANCIAL LLC AND FORTIGENT HOLDINGS COMPANY, INC. ARE BOTHWHOLLY-OWNED SUBSIDIARIES OF LPL HOLDINGS, INC. FORTIGENTHOLDINGS COMPANY, INC. IS THE HOLDING COMPANY FOR FORTIGENT,LLC AND FORTIGENT STRATEGIES, LLC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations

Organization Affiliates (continued)

HOLDINGS COMPANY, INC. IS THE HOLDING COMPANY FOR FORTIGENT,LLC AND FORTIGENT STRATEGIES, LLC.

Yes

No

No

04/23/2012


138164

FORTIGENT, LLC is under common control with the firm.

LPL FINANCIAL LLC AND FORTIGENT, LLC ARE UNDER COMMON CONTROL.FORTIGENT HOLDINGS COMPANY, INC. IS THE HOLDING COMPANY FORFORTIGENT, LLC. FORTIGENT HOLDINGS COMPANY, INC. AND LPLFINANCIAL LLC ARE BOTH WHOLLY-OWNED SUBSIDIARIES OF LPLHOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

01/22/1996


106684

INDEPENDENT ADVISERS GROUP CORP is under common control with the firm.

LPL FINANCIAL LLC AND INDEPENDENT ADVISERS GROUP CORPORATIONARE BOTH WHOLLY-OWNED SUBSIDIARIES OF LPL HOLDINGS, INC.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

This firm is not directly or indirectly, controlled by the following:

· bank holding company






Firm Operations

Organization Affiliates (continued)

· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 1 54 0

Arbitration N/A 50 N/A

Bond N/A 4 N/A






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

§ A "settled" matter generally involves an agreement by the parties to resolve the matter.Please note that firms may choose to settle customer disputes or regulatory matters forbusiness or other reasons.

§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 54

Reporting Source: Firm

Allegations: LPL CONSENTED TO THE SANCTIONS AND THE ENTRY OF THE FINDINGSTHAT FROM SEPTEMBER 2009 TO SEPTEMBER 2013, LPL ALLOWED ONEOF ITS REGISTERED REPRESENTATIVES TO ENGAGE IN INVESTMENTADVISORY BUSINESS FROM AN OFFICE IN THE STATE OF FLORIDAWITHOUT BEING LAWFULLY REGISTERED IN FLORIDA.

Current Status: Final






Initiated By: STATE OF FLORIDA OFFICE OF FINANCIAL REGULATION

Principal Sanction(s)/ReliefSought:

Civil and Administrative Penalt(ies) /Fine(s)

Other Sanction(s)/ReliefSought:

Date Initiated: 07/31/2015

Docket/Case Number: 51792-S

Principal Product Type: No Product

Other Product Type(s):

Allegations: LPL CONSENTED TO THE SANCTIONS AND THE ENTRY OF THE FINDINGSTHAT FROM SEPTEMBER 2009 TO SEPTEMBER 2013, LPL ALLOWED ONEOF ITS REGISTERED REPRESENTATIVES TO ENGAGE IN INVESTMENTADVISORY BUSINESS FROM AN OFFICE IN THE STATE OF FLORIDAWITHOUT BEING LAWFULLY REGISTERED IN FLORIDA.

Resolution Date: 08/03/2015

Resolution:

Other Sanctions Ordered:

Sanction Details: LPL PAID AN ADMINISTRATIVE FINE IN THE AMOUNT OF $10,000.00 ON JULY27, 2015.

Sanctions Ordered: Monetary/Fine $10,000.00Cease and Desist/Injunction

Stipulation and Consent

Disclosure 2 of 54

i


Initiated By: MASSACHUSETTS SECURITIES DIVISION


Docket/Case Number: 2015-0033

Allegations: LPL CONSENTED TO THE FINDINGS THAT IT DID NOT ESTABLISH,MAINTAIN, OR ENFORCE ADEQUATE PROCEDURES TO REVIEWSENIOR-SPECIFIC TITLES FOR COMPLIANCE WITH THE COMMONWEALTH'SSENIOR DESIGNATIONS REGULATIONS ADOPTED JUNE 1, 2007. AS ARESULT, LPL ALLOWED ITS BROKER-DEALER AGENTS AND INVESTMENTADVISER REPRESENTATIVES TO USE PROHIBITED SENIOR-SPECIFICDESIGNATIONS.














Resolution:

Other Sanctions Ordered: UNDERTAKINGS; CEASE AND DESIST

Sanction Details: RESPONDENT SHALL, WITHIN 5 DAYS OF THE SIGNED ORDER,RESPONDENT LPL AGREES TO PAY A FINE IN THE AMOUNT OF $250,000 TOTHE COMMONWEALTH OF MASSACHUSETTS.

RESPONDENT SHALL, WITHIN 15 DAYS OF THE SIGNED ORDER, REVIEWITS WRITTEN SUPERVISORY POLICIES AND PROCEDURES WITH RESPECTTO 1) 950 MASS CODE REGS 12.204(2)(I) AND 2) 950 MASS CODE REGS12.205(9)(C)(15). ALL WRITTEN POLICIES AND PROCEDURES MUSTINCLUDE METHODS FOR ENFORCEMENT AND COMPLIANCE OVERSIGHT.

RESPONDENT SHALL, WITHIN 45 DAYS OF THE SIGNED ORDER, PROVIDE AREPORT OF ITS CONCLUSIONS AND RECOMMENDATIONS WITH RESPECTTO ITEMS 1 AND 2 ABOVE.

RESPONDENT SHALL, WITHIN 60 DAYS OF THE SIGNED ORDER, PROVIDECERTIFICATION TO THE MASSACHUSETTS SECURITIES DIVISION THATCHANGES AND/OR ENHANCEMENTS TO ITS POLICIES AND PROCEDURESHAVE BEEN IMPLEMENTED.

Sanctions Ordered: CensureMonetary/Fine $250,000.00

Order

Disclosure 3 of 54

i

Reporting Source: Regulator

Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS WHO WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE CUSTOMERS WEREINSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE ORCLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHERONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGEDCUSTOMERS BY CAUSING THEM TO PAY HIGHER FEES THAN THEY WEREACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRMHAS FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM ANDPROCEDURES REASONABLY DESIGNED TO ENSURE THAT CUSTOMERSWHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OFAPPLICABLE SALES CHARGE WAIVERS. THE FIRM ALSO FAILED TO ADOPTANY CONTROLS TO DETECT INSTANCES IN WHICH THE FIRM DID NOTPROVIDE SALES CHARGE WAIVERS TO CUSTOMERS IN CONNECTIONWITH THEIR MUTUAL FUND PURCHASES.







Initiated By: FINRA


Other


N/A


Docket/Case Number: 2015045270901

Principal Product Type: Mutual Fund(s)


A SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE CUSTOMERS WEREINSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE ORCLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHERONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGEDCUSTOMERS BY CAUSING THEM TO PAY HIGHER FEES THAN THEY WEREACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRMHAS FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM ANDPROCEDURES REASONABLY DESIGNED TO ENSURE THAT CUSTOMERSWHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OFAPPLICABLE SALES CHARGE WAIVERS. THE FIRM ALSO FAILED TO ADOPTANY CONTROLS TO DETECT INSTANCES IN WHICH THE FIRM DID NOTPROVIDE SALES CHARGE WAIVERS TO CUSTOMERS IN CONNECTIONWITH THEIR MUTUAL FUND PURCHASES.


Resolution:

Other Sanctions Ordered: UNDERTAKING

Sanction Details: THE FIRM WAS CENSURED, ORDERED TO PAY RESTITUTION IN THEAMOUNT OF $5.72 MILLION TO CUSTOMERS WHO PAID AN INITIAL SALESCHARGE ON THEIR MUTUAL FUND PURCHASES OR PURCHASED CLASS BOR C SHARES WHEN A CLASS A SALES CHARGE WAIVER WAS AVAILABLE,PLUS INTEREST, ORDERED TO PAY RESTITUTION TO ITS CUSTOMERSWHO PURCHASE OR PURCHASED MUTUAL FUNDS WITHOUT ANAPPROPRIATE SALES CHARGE WAIVER DURING THE PERIOD JANUARY 1,2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES AND FULLYIMPLEMENTS TRAINING, SYSTEMS, AND PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE SUPERVISION OF MUTUALFUND SALES WAIVERS, UNDERTAKES TO SUBMIT TO FINRA A WRITTENREPORT DESCRIBING HOW THE FIRM HAS CORRECTED ITS SYSTEMS ANDPROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING TO ADDRESSTHE VIOLATIONS DESCRIBED IN THIS AWC, AND WITH RESPECT TO ANYCUSTOMER THAT PURCHASED CLASS B OR C SHARES AND STILL HOLDSSUCH SHARES IN AN ACCOUNT AT THE FIRM, IT SHALL OFFER SUCHCUSTOMER THE OPTION OF CONVERTING SUCH CLASS B OR C SHARESTO CLASS A SHARES. IF AN ELIGIBLE FUND DOES NOT PERMITCONVERSION OF CLASS B OR C SHARES TO CLASS A SHARES, THECUSTOMER SHALL BE PROVIDED THE OPTION OF REPLACING CLASS B ORC SHARES WITH AN EQUIVALENT VALUE OF CLASS A SHARES OFFERED BYANOTHER ELIGIBLE FUND. THE FIRM SHALL CAUSE SUCH CONVERSATIONTO OCCUR AT NO EXPENSE TO THE CUSTOMER.

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: CensureDisgorgement/Restitution

Acceptance, Waiver & Consent(AWC)





http://disciplinaryactions.finra.org/Search.aspx?CaseNB=2015045270901


PLUS INTEREST, ORDERED TO PAY RESTITUTION TO ITS CUSTOMERSWHO PURCHASE OR PURCHASED MUTUAL FUNDS WITHOUT ANAPPROPRIATE SALES CHARGE WAIVER DURING THE PERIOD JANUARY 1,2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES AND FULLYIMPLEMENTS TRAINING, SYSTEMS, AND PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE SUPERVISION OF MUTUALFUND SALES WAIVERS, UNDERTAKES TO SUBMIT TO FINRA A WRITTENREPORT DESCRIBING HOW THE FIRM HAS CORRECTED ITS SYSTEMS ANDPROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING TO ADDRESSTHE VIOLATIONS DESCRIBED IN THIS AWC, AND WITH RESPECT TO ANYCUSTOMER THAT PURCHASED CLASS B OR C SHARES AND STILL HOLDSSUCH SHARES IN AN ACCOUNT AT THE FIRM, IT SHALL OFFER SUCHCUSTOMER THE OPTION OF CONVERTING SUCH CLASS B OR C SHARESTO CLASS A SHARES. IF AN ELIGIBLE FUND DOES NOT PERMITCONVERSION OF CLASS B OR C SHARES TO CLASS A SHARES, THECUSTOMER SHALL BE PROVIDED THE OPTION OF REPLACING CLASS B ORC SHARES WITH AN EQUIVALENT VALUE OF CLASS A SHARES OFFERED BYANOTHER ELIGIBLE FUND. THE FIRM SHALL CAUSE SUCH CONVERSATIONTO OCCUR AT NO EXPENSE TO THE CUSTOMER.

iReporting Source: Firm

Initiated By: FINRA


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITDISADVANTAGED CERTAIN RETIREMENT PLAN AND CHARITABLEORGANIZATION CUSTOMERS WHO WERE ELIGIBLE TO PURCHASE CLASSA SHARES IN CERTAIN MUTUAL FUNDS WITHOUT A FRONT-END SALESCHARGE. THE FINDINGS STATED THAT THESE CUSTOMERS WEREINSTEAD SOLD CLASS A SHARES WITH A FRONT-END SALES CHARGE ORCLASS B OR C SHARES WITH BACK-END SALES CHARGES AND HIGHERONGOING FEES AND EXPENSES. THESE SALES DISADVANTAGEDCUSTOMERS BY CAUSING THEM TO PAY HIGHER FEES THAN THEY WEREACTUALLY REQUIRED TO PAY. THE FINDINGS ALSO STATED THAT THE FIRMHAS FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM ANDPROCEDURES REASONABLY DESIGNED TO ENSURE THAT CUSTOMERSWHO PURCHASED MUTUAL FUND SHARES RECEIVED THE BENEFIT OFAPPLICABLE SALES CHARGE WAIVERS. THE FIRM ALSO FAILED TO ADOPTANY CONTROLS TO DETECT INSTANCES IN WHICH THE FIRM DID NOTPROVIDE SALES CHARGE WAIVERS TO CUSTOMERS IN CONNECTIONWITH THEIR MUTUAL FUND PURCHASES.








Other


N/A





Resolution:


Sanction Details: THE FIRM WAS CENSURED, ORDERED TO PAY RESTITUTION IN THEAMOUNT OF $5.72 MILLION TO CUSTOMERS WHO PAID AN INITIAL SALESCHARGE ON THEIR MUTUAL FUND PURCHASES OR PURCHASED CLASS BOR C SHARES WHEN A CLASS A SALES CHARGE WAIVER WAS AVAILABLE,PLUS INTEREST, ORDERED TO PAY RESTITUTION TO ITS CUSTOMERSWHO PURCHASE OR PURCHASED MUTUAL FUNDS WITHOUT ANAPPROPRIATE SALES CHARGE WAIVER DURING THE PERIOD JANUARY 1,2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES AND FULLYIMPLEMENTS TRAINING, SYSTEMS, AND PROCEDURES REASONABLYDESIGNED TO ACHIEVE COMPLIANCE WITH THE SUPERVISION OF MUTUALFUND SALES WAIVERS, UNDERTAKES TO SUBMIT TO FINRA A WRITTENREPORT DESCRIBING HOW THE FIRM HAS CORRECTED ITS SYSTEMS ANDPROCEDURES (WRITTEN AND OTHERWISE) AND TRAINING TO ADDRESSTHE VIOLATIONS DESCRIBED IN THIS AWC, AND WITH RESPECT TO ANYCUSTOMER THAT PURCHASED CLASS B OR C SHARES AND STILL HOLDSSUCH SHARES IN AN ACCOUNT AT THE FIRM, IT SHALL OFFER SUCHCUSTOMER THE OPTION OF CONVERTING SUCH CLASS B OR C SHARESTO CLASS A SHARES. IF AN ELIGIBLE FUND DOES NOT PERMITCONVERSION OF CLASS B OR C SHARES TO CLASS A SHARES, THECUSTOMER SHALL BE PROVIDED THE OPTION OF REPLACING CLASS B ORC SHARES WITH AN EQUIVALENT VALUE OF CLASS A SHARES OFFERED BYANOTHER ELIGIBLE FUND. THE FIRM SHALL CAUSE SUCH CONVERSATIONTO OCCUR AT NO EXPENSE TO THE CUSTOMER.



Disclosure 4 of 54

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOENFORCE ITS SUPERVISORY PROCEDURES FOR THE SALES OF COMPLEXNON-TRADITIONAL EXCHANGE TRADED FUNDS (ETFS), CERTAIN VARIABLEANNUITY CONTRACTS, NON-TRADED REAL ESTATE INVESTMENT TRUSTS(REITS) AND OTHER COMPLEX PRODUCTS, AS WELL AS ITS FAILURE TOMONITOR AND REPORT TRADES AND DELIVER TO CUSTOMERS MORETHAN 14 MILLION TRADE CONFIRMATIONS. THE FINDINGS STATED THATWITH REGARD TO NON-TRADITIONAL ETFS, THE FIRM DID NOT HAVE ASYSTEM TO MONITOR THE LENGTH OF TIME THAT CUSTOMERS HELDTHESE SECURITIES IN THEIR ACCOUNTS, DID NOT ENFORCE ITS LIMITSON THE CONCENTRATION OF THOSE PRODUCTS IN CUSTOMERACCOUNTS, AND FAILED TO ENSURE THAT ALL OF ITS REGISTEREDREPRESENTATIVES WERE ADEQUATELY TRAINED ON THE RISKS OF THEPRODUCTS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOSUPERVISE ITS SALES OF VARIABLE ANNUITIES, IN SOME INSTANCESPERMITTING SALES WITHOUT DISCLOSING SURRENDER FEES, AND INCONNECTION WITH CERTAIN MUTUAL FUND "SWITCH" TRANSACTIONS, ITUSED AN AUTOMATED SURVEILLANCE SYSTEM THAT EXCLUDED THESETRADES FROM SUPERVISORY REVIEW. THE FIRM ALSO FAILED TOSUPERVISE NON-TRADED REITS BY, AMONG OTHER THINGS, FAILING TOIDENTIFY ACCOUNTS ELIGIBLE FOR VOLUME SALES CHARGE DISCOUNTS.FINRA FOUND THAT THE FIRM FAILED TO IMPLEMENT ADEQUATE SYSTEMSFOR THE REVIEW AND ACCURATE REPORTING OF TRADES AND FOR THEACCURATE DELIVERY OF TRADE CONFIRMATIONS. THE FIRM FAILED TOREVIEW LOW PRICED EQUITY TRADES, CONCENTRATED POSITIONS,ACTIVELY TRADED ACCOUNTS, AND POTENTIAL FRONT RUNNING BYEMPLOYEES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOACCURATELY REPORT TO THE OPTIONS CLEARING CORPORATION (OCC)OPTIONS DATA USING THE LARGE OPTIONS POSITIONS REPORT (LOPR)AND FAILED TO REPORT ITS CORRECT CAPACITY TO THE REAL-TIMETRANSACTION REPORTING SYSTEM (RTRS) AND TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE). THE FINDINGS ALSOINCLUDED THAT THE FIRM FURTHER FAILED TO ESTABLISH AND MAINTAINSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH ITS REPORTING REQUIREMENTS FOR OPTIONS,MUNICIPAL SECURITIES, AND TRACE ELIGIBLE SECURITIES. FINRA FOUNDTHAT THE FIRM FAILED TO DELIVER CONTEMPORANEOUS TRADECONFIRMATIONS AND FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM, REASONABLY DESIGNED TO ENSURE DELIVERYOF CONTEMPORANEOUS TRADE CONFIRMATIONS. FINRA ALSO FOUNDTHAT THE FIRM'S ANTI-MONEY LAUNDERING (AML) SURVEILLANCESYSTEM FAILED TO GENERATE ALERTS FOR EXCESSIVE ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS. INADDITION, FINRA DETERMINED THAT THE FIRM FAILED TO ENSURE ITPROVIDED COMPLETE AND ACCURATE INFORMATION TO FINRA AND TOFEDERAL AND STATE REGULATORS CONCERNING CERTAIN VARIABLEANNUITY TRANSACTIONS. MOREOVER, FINRA FOUND THAT THE FIRMFAILED TO REASONABLY SUPERVISE ITS ADVERTISING AND OTHERCOMMUNICATIONS, INCLUDING ITS REGISTERED REPRESENTATIVES' USEOF CONSOLIDATED REPORTS, THE CREATION OR USE OF CONSOLIDATEDREPORTS, AND FAILED TO ENSURE THAT THESE REPORTS REFLECTEDCOMPLETE AND ACCURATE INFORMATION. FURTHERMORE, FINRA FOUNDTHAT THE FIRM FAILED TO COMPLY WITH CERTAIN REGISTRATIONREQUIREMENTS SUCH AS VERIFYING PRIOR EMPLOYMENT OF CERTAINOF ITS REGISTERED REPRESENTATIVES AND FAILING TO TIMELY FILEFORM U4 AMENDMENTS AND FORMS U5. THE FINDINGS ALSO STATEDTHAT THE FIRM HAD A FAIL TO DELIVER POSITION AT A REGISTEREDCLEARING AGENCY IN AN EQUITY SECURITY RESULTING FROM A LONGSALE TRADE AND DID NOT CLOSE-OUT THE POSITION BY PURCHASING ORBORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIMEFRAME. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 204 OFREGULATION SHO.







Initiated By: FINRA





Principal Product Type: Other

Other Product Type(s): N/A

WITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS. INADDITION, FINRA DETERMINED THAT THE FIRM FAILED TO ENSURE ITPROVIDED COMPLETE AND ACCURATE INFORMATION TO FINRA AND TOFEDERAL AND STATE REGULATORS CONCERNING CERTAIN VARIABLEANNUITY TRANSACTIONS. MOREOVER, FINRA FOUND THAT THE FIRMFAILED TO REASONABLY SUPERVISE ITS ADVERTISING AND OTHERCOMMUNICATIONS, INCLUDING ITS REGISTERED REPRESENTATIVES' USEOF CONSOLIDATED REPORTS, THE CREATION OR USE OF CONSOLIDATEDREPORTS, AND FAILED TO ENSURE THAT THESE REPORTS REFLECTEDCOMPLETE AND ACCURATE INFORMATION. FURTHERMORE, FINRA FOUNDTHAT THE FIRM FAILED TO COMPLY WITH CERTAIN REGISTRATIONREQUIREMENTS SUCH AS VERIFYING PRIOR EMPLOYMENT OF CERTAINOF ITS REGISTERED REPRESENTATIVES AND FAILING TO TIMELY FILEFORM U4 AMENDMENTS AND FORMS U5. THE FINDINGS ALSO STATEDTHAT THE FIRM HAD A FAIL TO DELIVER POSITION AT A REGISTEREDCLEARING AGENCY IN AN EQUITY SECURITY RESULTING FROM A LONGSALE TRADE AND DID NOT CLOSE-OUT THE POSITION BY PURCHASING ORBORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIMEFRAME. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 204 OFREGULATION SHO.


Resolution:


No

Sanctions Ordered: CensureMonetary/Fine $10,000,000.00Disgorgement/Restitution








Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: THE FIRM WAS CENSURED AND FINED $10,000,000. FURTHERMORE THEFIRM UNDERTAKES TO: (1) SUBMIT TO FINRA A WRITTEN PLAN OF HOW ITWILL UNDERTAKE TO CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF ITS POLICIES, SYSTEMS AND PROCEDURES (WRITTEN ANDOTHERWISE) AND TRAINING RELATING TO THE CONDUCT ADDRESSED INTHIS AWC, INCLUDING THE LENGTH OF TIME THE REVIEW OF EACHPARTICULAR ISSUE IS ANTICIPATED TO TAKE, AND WILL DESCRIBE ITSADDITIONAL COMMITMENT OF RESOURCES AND PERSONNEL TO ITSLEGAL AND COMPLIANCE FUNCTIONS, INCLUDING CONTROL AND RISKFUNCTIONS; (2) CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING RELATED TO THE SALE OFNON-TRADITIONAL ETFS; (3) ORDERED TO PAY RESTITUTION TOCUSTOMERS AFFECTED BY THE FIRM'S FAILURE TO REASONABLYSUPERVISE ITS RECOMMENDED SALES OF NON-TRADITIONAL ETFS ASDESCRIBED IN THIS AWC AND SUBJECT TO PARAMETERS AGREED UPONBY FINRA STAFF, IN THE AMOUNT OF $1,664,592.05 AND ADDITIONALLY, ISORDERED TO PAY RESTITUTION TO ITS CUSTOMERS WHO PURCHASE ORPURCHASED NON-TRADITIONAL ETFS DURING THE PERIOD FROM APRIL10, 2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE SUPERVISION OF NON-TRADITIONAL ETFS; AND (4) CONDUCT AREVIEW, COVERING THE TIME PERIOD OF THE SURVEILLANCE SYSTEMAML SCENARIOS IDENTIFIED IN THIS AWC, SPECIFICALLY, THE TWOALERT-BASED SCENARIOS FOCUSED ON THE EXCESSIVE USE OF ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS. FINEPAID IN FULL ON 5/27/2015.



Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOENFORCE ITS SUPERVISORY PROCEDURES FOR THE SALES OF COMPLEXNON-TRADITIONAL EXCHANGE TRADED FUNDS (ETFS), CERTAIN VARIABLEANNUITY CONTRACTS, NON-TRADED REAL ESTATE INVESTMENT TRUSTS(REITS) AND OTHER COMPLEX PRODUCTS, AS WELL AS ITS FAILURE TOMONITOR AND REPORT TRADES AND DELIVER TO CUSTOMERS MORETHAN 14 MILLION TRADE CONFIRMATIONS. THE FINDINGS STATED THATWITH REGARD TO NON-TRADITIONAL ETFS, THE FIRM DID NOT HAVE ASYSTEM TO MONITOR THE LENGTH OF TIME THAT CUSTOMERS HELDTHESE SECURITIES IN THEIR ACCOUNTS, DID NOT ENFORCE ITS LIMITSON THE CONCENTRATION OF THOSE PRODUCTS IN CUSTOMERACCOUNTS, AND FAILED TO ENSURE THAT ALL OF ITS REGISTEREDREPRESENTATIVES WERE ADEQUATELY TRAINED ON THE RISKS OF THEPRODUCTS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOSUPERVISE ITS SALES OF VARIABLE ANNUITIES, IN SOME INSTANCESPERMITTING SALES WITHOUT DISCLOSING SURRENDER FEES, AND INCONNECTION WITH CERTAIN MUTUAL FUND "SWITCH" TRANSACTIONS, ITUSED AN AUTOMATED SURVEILLANCE SYSTEM THAT EXCLUDED THESETRADES FROM SUPERVISORY REVIEW. THE FIRM ALSO FAILED TOSUPERVISE NON-TRADED REITS BY, AMONG OTHER THINGS, FAILING TOIDENTIFY ACCOUNTS ELIGIBLE FOR VOLUME SALES CHARGE DISCOUNTS.FINRA FOUND THAT THE FIRM FAILED TO IMPLEMENT ADEQUATE SYSTEMSFOR THE REVIEW AND ACCURATE REPORTING OF TRADES AND FOR THEACCURATE DELIVERY OF TRADE CONFIRMATIONS. THE FIRM FAILED TOREVIEW LOW PRICED EQUITY TRADES, CONCENTRATED POSITIONS,ACTIVELY TRADED ACCOUNTS, AND POTENTIAL FRONT RUNNING BYEMPLOYEES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOACCURATELY REPORT TO THE OPTIONS CLEARING CORPORATION (OCC)OPTIONS DATA USING THE LARGE OPTIONS POSITIONS REPORT (LOPR)AND FAILED TO REPORT ITS CORRECT CAPACITY TO THE REAL-TIMETRANSACTION REPORTING SYSTEM (RTRS) AND TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE). THE FINDINGS ALSOINCLUDED THAT THE FIRM FURTHER FAILED TO ESTABLISH AND MAINTAINSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH ITS REPORTING REQUIREMENTS FOR OPTIONS,MUNICIPAL SECURITIES, AND TRACE ELIGIBLE SECURITIES. FINRA FOUNDTHAT THE FIRM FAILED TO DELIVER CONTEMPORANEOUS TRADECONFIRMATIONS AND FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM, REASONABLY DESIGNED TO ENSURE DELIVERYOF CONTEMPORANEOUS TRADE CONFIRMATIONS. FINRA ALSO FOUNDTHAT THE FIRM'S ANTI-MONEY LAUNDERING (AML) SURVEILLANCESYSTEM FAILED TO GENERATE ALERTS FOR EXCESSIVE ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS. INADDITION, FINRA DETERMINED THAT THE FIRM FAILED TO ENSURE ITPROVIDED COMPLETE AND ACCURATE INFORMATION TO FINRA AND TOFEDERAL AND STATE REGULATORS CONCERNING CERTAIN VARIABLEANNUITY TRANSACTIONS. MOREOVER, FINRA FOUND THAT THE FIRMFAILED TO REASONABLY SUPERVISE ITS ADVERTISING AND OTHERCOMMUNICATIONS, INCLUDING ITS REGISTERED REPRESENTATIVES' USEOF CONSOLIDATED REPORTS, THE CREATION OR USE OF CONSOLIDATEDREPORTS, AND FAILED TO ENSURE THAT THESE REPORTS REFLECTEDCOMPLETE AND ACCURATE INFORMATION. FURTHERMORE, FINRA FOUNDTHAT THE FIRM FAILED TO COMPLY WITH CERTAIN REGISTRATIONREQUIREMENTS SUCH AS VERIFYING PRIOR EMPLOYMENT OF CERTAINOF ITS REGISTERED REPRESENTATIVES AND FAILING TO TIMELY FILEFORM U4 AMENDMENTS AND FORMS U5. THE FINDINGS ALSO STATEDTHAT THE FIRM HAD A FAIL TO DELIVER POSITION AT A REGISTEREDCLEARING AGENCY IN AN EQUITY SECURITY RESULTING FROM A LONGSALE TRADE AND DID NOT CLOSE-OUT THE POSITION BY PURCHASING ORBORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIMEFRAME. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 204 OFREGULATION SHO.







WITH REGARD TO NON-TRADITIONAL ETFS, THE FIRM DID NOT HAVE ASYSTEM TO MONITOR THE LENGTH OF TIME THAT CUSTOMERS HELDTHESE SECURITIES IN THEIR ACCOUNTS, DID NOT ENFORCE ITS LIMITSON THE CONCENTRATION OF THOSE PRODUCTS IN CUSTOMERACCOUNTS, AND FAILED TO ENSURE THAT ALL OF ITS REGISTEREDREPRESENTATIVES WERE ADEQUATELY TRAINED ON THE RISKS OF THEPRODUCTS. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOSUPERVISE ITS SALES OF VARIABLE ANNUITIES, IN SOME INSTANCESPERMITTING SALES WITHOUT DISCLOSING SURRENDER FEES, AND INCONNECTION WITH CERTAIN MUTUAL FUND "SWITCH" TRANSACTIONS, ITUSED AN AUTOMATED SURVEILLANCE SYSTEM THAT EXCLUDED THESETRADES FROM SUPERVISORY REVIEW. THE FIRM ALSO FAILED TOSUPERVISE NON-TRADED REITS BY, AMONG OTHER THINGS, FAILING TOIDENTIFY ACCOUNTS ELIGIBLE FOR VOLUME SALES CHARGE DISCOUNTS.FINRA FOUND THAT THE FIRM FAILED TO IMPLEMENT ADEQUATE SYSTEMSFOR THE REVIEW AND ACCURATE REPORTING OF TRADES AND FOR THEACCURATE DELIVERY OF TRADE CONFIRMATIONS. THE FIRM FAILED TOREVIEW LOW PRICED EQUITY TRADES, CONCENTRATED POSITIONS,ACTIVELY TRADED ACCOUNTS, AND POTENTIAL FRONT RUNNING BYEMPLOYEES. THE FINDINGS ALSO STATED THAT THE FIRM FAILED TOACCURATELY REPORT TO THE OPTIONS CLEARING CORPORATION (OCC)OPTIONS DATA USING THE LARGE OPTIONS POSITIONS REPORT (LOPR)AND FAILED TO REPORT ITS CORRECT CAPACITY TO THE REAL-TIMETRANSACTION REPORTING SYSTEM (RTRS) AND TO THE TRADEREPORTING AND COMPLIANCE ENGINE (TRACE). THE FINDINGS ALSOINCLUDED THAT THE FIRM FURTHER FAILED TO ESTABLISH AND MAINTAINSUPERVISORY PROCEDURES REASONABLY DESIGNED TO ENSURECOMPLIANCE WITH ITS REPORTING REQUIREMENTS FOR OPTIONS,MUNICIPAL SECURITIES, AND TRACE ELIGIBLE SECURITIES. FINRA FOUNDTHAT THE FIRM FAILED TO DELIVER CONTEMPORANEOUS TRADECONFIRMATIONS AND FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM, REASONABLY DESIGNED TO ENSURE DELIVERYOF CONTEMPORANEOUS TRADE CONFIRMATIONS. FINRA ALSO FOUNDTHAT THE FIRM'S ANTI-MONEY LAUNDERING (AML) SURVEILLANCESYSTEM FAILED TO GENERATE ALERTS FOR EXCESSIVE ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS. INADDITION, FINRA DETERMINED THAT THE FIRM FAILED TO ENSURE ITPROVIDED COMPLETE AND ACCURATE INFORMATION TO FINRA AND TOFEDERAL AND STATE REGULATORS CONCERNING CERTAIN VARIABLEANNUITY TRANSACTIONS. MOREOVER, FINRA FOUND THAT THE FIRMFAILED TO REASONABLY SUPERVISE ITS ADVERTISING AND OTHERCOMMUNICATIONS, INCLUDING ITS REGISTERED REPRESENTATIVES' USEOF CONSOLIDATED REPORTS, THE CREATION OR USE OF CONSOLIDATEDREPORTS, AND FAILED TO ENSURE THAT THESE REPORTS REFLECTEDCOMPLETE AND ACCURATE INFORMATION. FURTHERMORE, FINRA FOUNDTHAT THE FIRM FAILED TO COMPLY WITH CERTAIN REGISTRATIONREQUIREMENTS SUCH AS VERIFYING PRIOR EMPLOYMENT OF CERTAINOF ITS REGISTERED REPRESENTATIVES AND FAILING TO TIMELY FILEFORM U4 AMENDMENTS AND FORMS U5. THE FINDINGS ALSO STATEDTHAT THE FIRM HAD A FAIL TO DELIVER POSITION AT A REGISTEREDCLEARING AGENCY IN AN EQUITY SECURITY RESULTING FROM A LONGSALE TRADE AND DID NOT CLOSE-OUT THE POSITION BY PURCHASING ORBORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIMEFRAME. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 204 OFREGULATION SHO.






Initiated By: FINRA


Other


N/A




Other Product Type(s): N/A

THAT THE FIRM FAILED TO COMPLY WITH CERTAIN REGISTRATIONREQUIREMENTS SUCH AS VERIFYING PRIOR EMPLOYMENT OF CERTAINOF ITS REGISTERED REPRESENTATIVES AND FAILING TO TIMELY FILEFORM U4 AMENDMENTS AND FORMS U5. THE FINDINGS ALSO STATEDTHAT THE FIRM HAD A FAIL TO DELIVER POSITION AT A REGISTEREDCLEARING AGENCY IN AN EQUITY SECURITY RESULTING FROM A LONGSALE TRADE AND DID NOT CLOSE-OUT THE POSITION BY PURCHASING ORBORROWING SECURITIES OF LIKE KIND AND QUANTITY WITHIN THE TIMEFRAME. THE FINDINGS ALSO INCLUDED THAT THE FIRM FAILED TOESTABLISH AND MAINTAIN WRITTEN SUPERVISORY PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RULE 204 OFREGULATION SHO.


Resolution:


Sanction Details: THE FIRM WAS CENSURED AND FINED $10,000,000. FURTHERMORE THEFIRM UNDERTAKES TO: (1) SUBMIT TO FINRA A WRITTEN PLAN OF HOW ITWILL UNDERTAKE TO CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF ITS POLICIES, SYSTEMS AND PROCEDURES (WRITTEN ANDOTHERWISE) AND TRAINING RELATING TO THE CONDUCT ADDRESSED INTHIS AWC, INCLUDING THE LENGTH OF TIME THE REVIEW OF EACHPARTICULAR ISSUE IS ANTICIPATED TO TAKE, AND WILL DESCRIBE ITSADDITIONAL COMMITMENT OF RESOURCES AND PERSONNEL TO ITSLEGAL AND COMPLIANCE FUNCTIONS, INCLUDING CONTROL AND RISKFUNCTIONS; (2) CONDUCT A COMPREHENSIVE REVIEW OF THEADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING RELATED TO THE SALE OFNON-TRADITIONAL ETFS; (3) ORDERED TO PAY RESTITUTION TOCUSTOMERS AFFECTED BY THE FIRM'S FAILURE TO REASONABLYSUPERVISE ITS RECOMMENDED SALES OF NON-TRADITIONAL ETFS ASDESCRIBED IN THIS AWC AND SUBJECT TO PARAMETERS AGREED UPONBY FINRA STAFF, IN THE AMOUNT OF $1,664,592.05 AND ADDITIONALLY, ISORDERED TO PAY RESTITUTION TO ITS CUSTOMERS WHO PURCHASE ORPURCHASED NON-TRADITIONAL ETFS DURING THE PERIOD FROM APRIL10, 2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE SUPERVISION OF NON-TRADITIONAL ETFS; AND (4) CONDUCT AREVIEW, COVERING THE TIME PERIOD OF THE SURVEILLANCE SYSTEMAML SCENARIOS IDENTIFIED IN THIS AWC, SPECIFICALLY, THE TWOALERT-BASED SCENARIOS FOCUSED ON THE EXCESSIVE USE OF ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS.









(WRITTEN AND OTHERWISE) AND TRAINING RELATED TO THE SALE OFNON-TRADITIONAL ETFS; (3) ORDERED TO PAY RESTITUTION TOCUSTOMERS AFFECTED BY THE FIRM'S FAILURE TO REASONABLYSUPERVISE ITS RECOMMENDED SALES OF NON-TRADITIONAL ETFS ASDESCRIBED IN THIS AWC AND SUBJECT TO PARAMETERS AGREED UPONBY FINRA STAFF, IN THE AMOUNT OF $1,664,592.05 AND ADDITIONALLY, ISORDERED TO PAY RESTITUTION TO ITS CUSTOMERS WHO PURCHASE ORPURCHASED NON-TRADITIONAL ETFS DURING THE PERIOD FROM APRIL10, 2015 THROUGH THE DATE THAT THE FIRM ESTABLISHES SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE SUPERVISION OF NON-TRADITIONAL ETFS; AND (4) CONDUCT AREVIEW, COVERING THE TIME PERIOD OF THE SURVEILLANCE SYSTEMAML SCENARIOS IDENTIFIED IN THIS AWC, SPECIFICALLY, THE TWOALERT-BASED SCENARIOS FOCUSED ON THE EXCESSIVE USE OF ATMWITHDRAWALS AND ATM WITHDRAWALS IN FOREIGN JURISDICTIONS.

Disclosure 5 of 54

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Initiated By: STATE OF OHIO DEPARTMENT OF INSURANCE


Revocation



Docket/Case Number: N/A



Allegations: ON OR ABOUT SEPTEMBER 4, 2014, LPL ENTERED INTO A CONSENTAGREEMENT WITH THE OHIO DEPARTMENT OF INSURANCE REGARDINGTHE REPORTING OF VARIOUS ADMINISTRATIVE ACTIONS ON ITS LICENSE.PURSUANT TO THE AGREEMENT, LPL WAS REQUIRED TO PAY A CIVILPENALTY AND ADMINISTRATIVE COSTS. LPL FAILED TO COMPLY WITH THEORDER IN PAYING THE CIVIL PENALTY AND ADMINISTRATIVE COSTS.



Resolution:


Sanctions Ordered: Revocation/Expulsion/Denial

Order








Sanction Details: LPL'S BUSINESS ENTITY INSURANCE AGENT'S LICENSE WAS REVOKED.

Firm Statement LPL DID NOT RECEIVE THE INVOICE FOR THE $1,000 CIVIL PENALTY ANDADMINISTRATIVE COSTS. WHEN THE FIRM BECAME AWARE OF THEORDER OF REVOCATION, THE MONETARY PENALTY WAS PAID PROMPTLYAND THE FIRM'S LICENSE WAS REINSTATED ON FEBRUARY 27, 2015.

Disclosure 6 of 54

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Initiated By: STATE OF ILLINOIS, ILLINOIS SECURITIES DEPARTMENT


Restitution


NOTICE OF HEARING





Allegations: LPL FINANCIAL FAILED TO DETECT IMPROPER AND FRAUDULENT CODUCTON THE PART OF DAVID LISNEK TOWARD HIS LPL CLIENTS. LPL FINANCIALALLOWED MR. LISNEK TO REMAIN A REGISTERED REPRESENTATIVEWHILE SEVERAL FACTS, VIEWED TOGETHER AS A PATTERN OF CONDUCT,WOULD HAVE CONSTITUTED MULTIPLE CAUTIONARY INDICATORS ("REDFLAGS") OF THE POTENTIAL FOR IMPROPER CONDUCT.



Resolution:

Other Sanctions Ordered: RESTITUTION IN THE AMOUNT OF $315,218.00.

Sanction Details: CONSENT ORDER

Sanctions Ordered: CensureMonetary/Fine $500,000.00Disgorgement/Restitution

Consent

Disclosure 7 of 54

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Initiated By: STATE OF OHIO DEPARTMENT OF INSURANCE


Other



Docket/Case Number: NONE



Allegations: FROM APPROXIMATELY DECEMBER 2010 THROUGH DECEMBER 12, 2012,LPL FINANCIAL WAS SUBJECT TO VARIOUS FINRA ACTIONS AND OTHERADMINISTRATIVE ACTIONS ON ITS PROFESSIONAL LICENSES IN THESTATES OF ILLINOIS, KENTUCKY, MISSOURI, AND TEXAS. LPL FINANCIALREPORTED ITS ADMINISTRATIVE ACTIONS TO THE OHIO DEPARTMENT OFINSURANCE. HOWEVER, THEY WEREN'T REPORTED TO THE DEPARTMENTWITHIN THE REQUIRED THIRTY-DAY TIME PERIOD.



Resolution:

Other Sanctions Ordered: PAY AN ADMINISTRATIVE COST OF $200.00.

Sanction Details: LPL FINANCIAL AGREES TO PAY A CIVIL PENALTY IN THE AMOUNT OF$800.00, AND AN ADMINISTRATIVE COST IN THE AMOUNT OF $200.00.

Sanctions Ordered: CensureMonetary/Fine $800.00

Order

Disclosure 8 of 54

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOEXECUTE ORDERS FULLY AND PROMPTLY. THE FINDINGS STATED THATTHE FIRM TRANSMITTED TO OATS REPORTS THAT CONTAINEDINACCURATE, INCOMPLETE, OR IMPROPERLY FORMATTED DATA.SPECIFICALLY, THE REPORTS CONTAINED INACCURATE TIMESTAMPS.ADDITIONALLY, THE FIRM FAILED TO TRANSMIT TWO REPORTABLE ORDEREVENTS (ROES) TO OATS. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO SHOW THE CORRECT ORDER RECEIPT TIME ON THEMEMORANDUM. THE FINDINGS ALSO INCLUDED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULESOF FINRA OR THE SEC. FINRA FOUND THAT THE FIRM FAILED TO REPORTS1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIES WITHIN15 MINUTES OF THE TIME OF EXECUTION TO TRACE.








Initiated By: FINRA


Other


N/A




Other Product Type(s): UNSPECIFIED SECURITIES

ADDITIONALLY, THE FIRM FAILED TO TRANSMIT TWO REPORTABLE ORDEREVENTS (ROES) TO OATS. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO SHOW THE CORRECT ORDER RECEIPT TIME ON THEMEMORANDUM. THE FINDINGS ALSO INCLUDED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULESOF FINRA OR THE SEC. FINRA FOUND THAT THE FIRM FAILED TO REPORTS1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIES WITHIN15 MINUTES OF THE TIME OF EXECUTION TO TRACE.


Resolution:

Other Sanctions Ordered: THE FIRM IS REQUIRED TO REVISE ITS WRITTEN SUPERVISORYPROCEDURES.

Sanction Details: SEE ABOVE

FINE PAID IN FULL ON AUGUST 10, 2014.


No










Initiated By: FINRA


Other


N/A





Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TOEXECUTE ORDERS FULLY AND PROMPTLY. THE FINDINGS STATED THATTHE FIRM TRANSMITTED TO OATS REPORTS THAT CONTAINEDINACCURATE, INCOMPLETE, OR IMPROPERLY FORMATTED DATA.SPECIFICALLY, THE REPORTS CONTAINED INACCURATE TIMESTAMPS.ADDITIONALLY, THE FIRM FAILED TO TRANSMIT TWO REPORTABLE ORDEREVENTS (ROES) TO OATS. THE FINDINGS ALSO STATED THAT THE FIRMFAILED TO SHOW THE CORRECT ORDER RECEIPT TIME ON THEMEMORANDUM. THE FINDINGS ALSO INCLUDED THAT THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS, AND THE RULESOF FINRA OR THE SEC. FINRA FOUND THAT THE FIRM FAILED TO REPORTS1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBT SECURITIES WITHIN15 MINUTES OF THE TIME OF EXECUTION TO TRACE.



Resolution:

Other Sanctions Ordered: THE FIRM IS REQUIRED TO REVISE ITS WRITTEN SUPERVISORYPROCEDURES.




Disclosure 9 of 54

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Initiated By: STATE OF ILLINOIS, ILLINOIS SECURITITES DEPARTMENT


Restitution


NOTICE OF HEARING



URL for Regulatory Action:


Other Product Type(s): VARIABLE

Allegations: FROM AT LEAST 2009 TO 2013, LPL FINANCIAL FAILED TO ADEQUATELYMAINTAIN CERTAIN BOOKSAND RECORDS DOCUMENTING ITS VARIABLEANNUITY EXCHANGE BUSINESS AND FAILED TO ENFORCE ITSSUPERVISORY SYSTEM AND PROCEDURES IN CONNECTION WITH THEDOCUMENTATION OF CERTAIN SALESPERSONS' VARIABLE ANNUITYEXCHANGE ACTIVITIES. LPL FINANCIAL'S CONDUCT CONSTITUTES CAUSETO IMPOSE SANCTIONS PURSUANT TO SECTIONS 8.E.1(E) AND (Q) OF THEILLINOIS SECURITIES LAW OF 1953, [815 ILCS 5/1 ET SEQ.,] (THE "ACT") ANDVIOLATES SECTION 12.A OF THE ACT.



Resolution:

Other Sanctions Ordered: RESTITUTION AMOUNT OF $819,885.53


Regulator Statement NOTICE OF HEARING WAS ISSUED JUNE 30, 2014. CONSENT ORDER WASISSUED JUNE 30, 2014. CONTACT 217-782-2256


No

Sanctions Ordered: CensureMonetary/Fine $2,000,000.00Disgorgement/RestitutionCease and Desist/Injunction

Consent








Initiated By: STATE OF ILLINOIS, ILLINOIS SECURITIES DEPARTMENT


Restitution


NOTICE OF HEARING



Principal Product Type: Annuity(ies) - Variable


Allegations: FROM AT LEAST 2009 TO 2013, LPL FINANCIAL FAILED TO ADEQUATELYMAINTAIN CERTAIN BOOKS AND RECORDS DOCUMENTING ITS VARIABLEANNUITY EXCHANGE BUSINESS AND FAILED TO ENFORCE ITSSUPERVISORY SYSTEM AND PROCEDURES IN CONNECTION WITH THEDOCUMENTATION OF CERTAIN SALESPERSONS' VARIABLE ANNUITYEXCHANGE ACTIVITIES. LPL FINANCIAL'S CONDUCT CONSTITUTES CAUSETO IMPOSE SANCTIONS PURSUANT TO SECTIONS 8.E.1(E) AND (Q) OF THEILLINOIS SECURITIES LAW OF 1953, [815 ILCS 5/1 ET SEQ.,] (THE "ACT") ANDVIOLATES SECTION 12.A OF THE ACT.



Resolution:

Other Sanctions Ordered: RESTITUTION AMOUNT OF $819,885.53



Consent

Disclosure 10 of 54

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Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITSALTERNATIVE INVESTMENT BUSINESS INCLUDED NON-TRADED REITS, OILAND GAS PARTNERSHIPS, BUSINESS DEVELOPMENT COMPANIES (BDCS),EQUIPMENT LEASING PROGRAMS, REAL ESTATE LIMITED PARTNERSHIPS,HEDGE FUNDS, MANAGED FUTURES AND ANY OTHER ILLIQUIDPASS-THROUGH INVESTMENTS. THE FINDINGS STATED THAT THE FIRMHAD, GENERALLY, A THREE-TIERED SUPERVISORY SYSTEM FORPROCESSING AND REVIEWING ALTERNATIVE INVESTMENTTRANSACTIONS. HOWEVER, THE FIRM HAD DEFICIENCIES IN EACH LAYEROF THE SUPERVISORY SYSTEM FOR PROCESSING AND REVIEWINGALTERNATIVE INVESTMENT TRANSACTIONS, IN ITS TRANSACTIONPAPERWORK AND IN ITS ALTERNATIVE INVESTMENTS TRAINING FOR ITSREGISTERED REPRESENTATIVES AND SUPERVISORY PERSONNEL. THEFINDINGS ALSO STATED THAT FOR OVER FOUR YEARS, THE FIRM FAILEDTO IMPLEMENT AN ADEQUATE SUPERVISORY SYSTEM, INCLUDINGWRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA RULE ANDCERTAIN STATE SUITABILITY REQUIREMENTS. DURING THE PERIOD THEFIRM HAD THE FOLLOWING SUPERVISORY DEFICIENCIES: THEAUTOMATED SYSTEM (AI DATABASE) UTILIZED BY THE FIRM TO ASSESSCONCENTRATION LEVELS FOR ALTERNATIVE INVESTMENTTRANSACTIONS, DUE TO PROGRAMMING LOGIC FAILURES, FAILED TOCONSISTENTLY IDENTIFY TRANSACTIONS THAT VIOLATED ITS OWNALTERNATIVE INVESTMENT CONCENTRATION GUIDELINES. A SAMPLINGOF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH CUSTOMERS'AGGREGATE ALTERNATIVE INVESTMENT HOLDINGS EXCEEDED THEFIRM'S CONCENTRATION GUIDELINES; THE AI DATABASE DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE INFORMATIONREGARDING STATE AND PROSPECTUS SUITABILITY STANDARDS. ASAMPLING OF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH THEFIRM APPROVED REIT TRANSACTIONS IN CONTRAVENTION OF STATESUITABILITY STANDARDS AND OCCASIONS IN WHICH IT APPROVED REITTRANSACTIONS IN VIOLATION OF THE PROSPECTUS SUITABILITYSTANDARDS; THE FIRM'S LIQUID NET WORTH DEFINITION WAS NOTCOMPARED AND ANALYZED AGAINST THE DEFINITIONS PROVIDED BYOTHER STATES AND DID NOT DEDUCT TAXES, FEES, AND PENALTIES FORAN EARLY RETIREMENT ACCOUNT WITHDRAWAL; THE FIRM'SALTERNATIVE INVESTMENT FORM (AI-1 FORM) PROVIDED INACCURATEINFORMATION TO REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL REGARDING THE COMPUTATION OF ALTERNATIVEINVESTMENT CONCENTRATION LEVELS; THE FIRM'S MANUAL SUITABILITYREVIEW OF REGISTERED REPRESENTATIVES' AND PRODUCING OFFICEOF SUPERVISORY JURISDICTION'S ALTERNATIVE INVESTMENTTRANSACTIONS WAS FLAWED; THERE WERE INADEQUATE TRAINING OFTHE FIRM'S REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL TO ANALYZE STATE SUITABILITY STANDARDS FORALTERNATIVE INVESTMENT TRANSACTIONS (E.G., REITS, BDCS,); THESUITABILITY CHART PROVIDED TO THE FIRM SUPERVISORS DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE PROSPECTUS ANDSTATE SUITABILITY STANDARDS RELATING TO CERTAIN ALTERNATIVEINVESTMENTS (E.G., REITS, BDCS AND MANAGED FUTURES); AND THEFIRM HAD NO CONTROLS TO ENSURE THAT ITS REGISTEREDREPRESENTATIVES, WHEN EFFECTING CERTAIN ALTERNATIVEINVESTMENT TRANSACTIONS (E.G. REITS, BDCS), USED THESUBSCRIPTION AGREEMENT THAT CORRESPONDED TO THE MOSTRECENT PROSPECTUS ISSUED BY THE SPONSOR (TO ENSURE THAT THECORRECT STATE SUITABILITY STANDARDS WERE EMPLOYED BY THEREGISTERED REPRESENTATIVE AND REVIEWING PERSONNEL). THEFINDINGS ALSO INCLUDED THAT DURING THE PERIOD, THE FIRM FAILEDTO IMPLEMENT WSPS THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE FINRA RULE AND STATE SUITABILITYREQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)








Allegations:TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITSALTERNATIVE INVESTMENT BUSINESS INCLUDED NON-TRADED REITS, OILAND GAS PARTNERSHIPS, BUSINESS DEVELOPMENT COMPANIES (BDCS),EQUIPMENT LEASING PROGRAMS, REAL ESTATE LIMITED PARTNERSHIPS,HEDGE FUNDS, MANAGED FUTURES AND ANY OTHER ILLIQUIDPASS-THROUGH INVESTMENTS. THE FINDINGS STATED THAT THE FIRMHAD, GENERALLY, A THREE-TIERED SUPERVISORY SYSTEM FORPROCESSING AND REVIEWING ALTERNATIVE INVESTMENTTRANSACTIONS. HOWEVER, THE FIRM HAD DEFICIENCIES IN EACH LAYEROF THE SUPERVISORY SYSTEM FOR PROCESSING AND REVIEWINGALTERNATIVE INVESTMENT TRANSACTIONS, IN ITS TRANSACTIONPAPERWORK AND IN ITS ALTERNATIVE INVESTMENTS TRAINING FOR ITSREGISTERED REPRESENTATIVES AND SUPERVISORY PERSONNEL. THEFINDINGS ALSO STATED THAT FOR OVER FOUR YEARS, THE FIRM FAILEDTO IMPLEMENT AN ADEQUATE SUPERVISORY SYSTEM, INCLUDINGWRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA RULE ANDCERTAIN STATE SUITABILITY REQUIREMENTS. DURING THE PERIOD THEFIRM HAD THE FOLLOWING SUPERVISORY DEFICIENCIES: THEAUTOMATED SYSTEM (AI DATABASE) UTILIZED BY THE FIRM TO ASSESSCONCENTRATION LEVELS FOR ALTERNATIVE INVESTMENTTRANSACTIONS, DUE TO PROGRAMMING LOGIC FAILURES, FAILED TOCONSISTENTLY IDENTIFY TRANSACTIONS THAT VIOLATED ITS OWNALTERNATIVE INVESTMENT CONCENTRATION GUIDELINES. A SAMPLINGOF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH CUSTOMERS'AGGREGATE ALTERNATIVE INVESTMENT HOLDINGS EXCEEDED THEFIRM'S CONCENTRATION GUIDELINES; THE AI DATABASE DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE INFORMATIONREGARDING STATE AND PROSPECTUS SUITABILITY STANDARDS. ASAMPLING OF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH THEFIRM APPROVED REIT TRANSACTIONS IN CONTRAVENTION OF STATESUITABILITY STANDARDS AND OCCASIONS IN WHICH IT APPROVED REITTRANSACTIONS IN VIOLATION OF THE PROSPECTUS SUITABILITYSTANDARDS; THE FIRM'S LIQUID NET WORTH DEFINITION WAS NOTCOMPARED AND ANALYZED AGAINST THE DEFINITIONS PROVIDED BYOTHER STATES AND DID NOT DEDUCT TAXES, FEES, AND PENALTIES FORAN EARLY RETIREMENT ACCOUNT WITHDRAWAL; THE FIRM'SALTERNATIVE INVESTMENT FORM (AI-1 FORM) PROVIDED INACCURATEINFORMATION TO REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL REGARDING THE COMPUTATION OF ALTERNATIVEINVESTMENT CONCENTRATION LEVELS; THE FIRM'S MANUAL SUITABILITYREVIEW OF REGISTERED REPRESENTATIVES' AND PRODUCING OFFICEOF SUPERVISORY JURISDICTION'S ALTERNATIVE INVESTMENTTRANSACTIONS WAS FLAWED; THERE WERE INADEQUATE TRAINING OFTHE FIRM'S REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL TO ANALYZE STATE SUITABILITY STANDARDS FORALTERNATIVE INVESTMENT TRANSACTIONS (E.G., REITS, BDCS,); THESUITABILITY CHART PROVIDED TO THE FIRM SUPERVISORS DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE PROSPECTUS ANDSTATE SUITABILITY STANDARDS RELATING TO CERTAIN ALTERNATIVEINVESTMENTS (E.G., REITS, BDCS AND MANAGED FUTURES); AND THEFIRM HAD NO CONTROLS TO ENSURE THAT ITS REGISTEREDREPRESENTATIVES, WHEN EFFECTING CERTAIN ALTERNATIVEINVESTMENT TRANSACTIONS (E.G. REITS, BDCS), USED THESUBSCRIPTION AGREEMENT THAT CORRESPONDED TO THE MOSTRECENT PROSPECTUS ISSUED BY THE SPONSOR (TO ENSURE THAT THECORRECT STATE SUITABILITY STANDARDS WERE EMPLOYED BY THEREGISTERED REPRESENTATIVE AND REVIEWING PERSONNEL). THEFINDINGS ALSO INCLUDED THAT DURING THE PERIOD, THE FIRM FAILEDTO IMPLEMENT WSPS THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE FINRA RULE AND STATE SUITABILITYREQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)






Initiated By: FINRA


Other


N/A




Other Product Type(s): ALTERNATIVE INVESTMENTS

PERSONNEL TO ANALYZE STATE SUITABILITY STANDARDS FORALTERNATIVE INVESTMENT TRANSACTIONS (E.G., REITS, BDCS,); THESUITABILITY CHART PROVIDED TO THE FIRM SUPERVISORS DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE PROSPECTUS ANDSTATE SUITABILITY STANDARDS RELATING TO CERTAIN ALTERNATIVEINVESTMENTS (E.G., REITS, BDCS AND MANAGED FUTURES); AND THEFIRM HAD NO CONTROLS TO ENSURE THAT ITS REGISTEREDREPRESENTATIVES, WHEN EFFECTING CERTAIN ALTERNATIVEINVESTMENT TRANSACTIONS (E.G. REITS, BDCS), USED THESUBSCRIPTION AGREEMENT THAT CORRESPONDED TO THE MOSTRECENT PROSPECTUS ISSUED BY THE SPONSOR (TO ENSURE THAT THECORRECT STATE SUITABILITY STANDARDS WERE EMPLOYED BY THEREGISTERED REPRESENTATIVE AND REVIEWING PERSONNEL). THEFINDINGS ALSO INCLUDED THAT DURING THE PERIOD, THE FIRM FAILEDTO IMPLEMENT WSPS THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE FINRA RULE AND STATE SUITABILITYREQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)


Resolution:


No









Other Sanctions Ordered: THE FIRM FURTHER CONSENTS TO UNDERTAKE, OR COMPLETE THEUNDERTAKING IF ALREADY UNDER WAY, A COMPREHENSIVE REVIEW OFTHE ADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING RELATING TO THESUPERVISORY DEFICIENCIES ADDRESSED IN THE AWC. IN ADDITION,WITHIN 90 DAYS OF NOTICE OF ACCEPTANCE OF THIS AWC, AN OFFICEROF THE FIRM SHALL CERTIFY IN WRITING TO FINRA THAT (I) THE FIRM HASENGAGED IN THE COMPREHENSIVE REVIEW; AND (II) AS OF THE DATE OFTHE CERTIFICATION, RESPONDENT HAS IN PLACE POLICIES ANDPROCEDURES SUFFICIENT TO ADDRESS THE MATTERS IDENTIFIED INTHIS AWC.


Regulator Statement CONT. FROM ALLEGATION SECTION) -IN ADDITION, THE WSPS DID NOT REQUIRE THAT TAXES, FEES, ANDPENALTIES BE DEDUCTED FROM A CUSTOMER'S LIQUID NET WORTHCALCULATION IN THE EVENT OF AN EARLY WITHDRAWAL FROM ARETIREMENT ACCOUNT. LASTLY, THE WSPS DID NOT DESCRIBE THESTEPS THAT SHOULD HAVE BEEN TAKEN BY A SUPERVISOR INCONDUCTING A SUITABILITY REVIEW OF ALTERNATIVE INVESTMENTTRANSACTIONS.

Sanctions Ordered:Monetary/Fine $950,000.00


Allegations: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT ITSALTERNATIVE INVESTMENT BUSINESS INCLUDED NON-TRADED REITS, OILAND GAS PARTNERSHIPS, BUSINESS DEVELOPMENT COMPANIES (BDCS),EQUIPMENT LEASING PROGRAMS, REAL ESTATE LIMITED PARTNERSHIPS,HEDGE FUNDS, MANAGED FUTURES AND ANY OTHER ILLIQUIDPASS-THROUGH INVESTMENTS. THE FINDINGS STATED THAT THE FIRMHAD, GENERALLY, A THREE-TIERED SUPERVISORY SYSTEM FORPROCESSING AND REVIEWING ALTERNATIVE INVESTMENTTRANSACTIONS. HOWEVER, THE FIRM HAD DEFICIENCIES IN EACH LAYEROF THE SUPERVISORY SYSTEM FOR PROCESSING AND REVIEWINGALTERNATIVE INVESTMENT TRANSACTIONS, IN ITS TRANSACTIONPAPERWORK AND IN ITS ALTERNATIVE INVESTMENTS TRAINING FOR ITSREGISTERED REPRESENTATIVES AND SUPERVISORY PERSONNEL. THEFINDINGS ALSO STATED THAT FOR OVER FOUR YEARS, THE FIRM FAILEDTO IMPLEMENT AN ADEQUATE SUPERVISORY SYSTEM, INCLUDINGWRITTEN SUPERVISORY PROCEDURES (WSPS), REASONABLY DESIGNEDTO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA RULE ANDCERTAIN STATE SUITABILITY REQUIREMENTS. DURING THE PERIOD THEFIRM HAD THE FOLLOWING SUPERVISORY DEFICIENCIES: THEAUTOMATED SYSTEM (AI DATABASE) UTILIZED BY THE FIRM TO ASSESSCONCENTRATION LEVELS FOR ALTERNATIVE INVESTMENTTRANSACTIONS, DUE TO PROGRAMMING LOGIC FAILURES, FAILED TOCONSISTENTLY IDENTIFY TRANSACTIONS THAT VIOLATED ITS OWNALTERNATIVE INVESTMENT CONCENTRATION GUIDELINES. A SAMPLINGOF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH CUSTOMERS'AGGREGATE ALTERNATIVE INVESTMENT HOLDINGS EXCEEDED THEFIRM'S CONCENTRATION GUIDELINES; THE AI DATABASE DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE INFORMATIONREGARDING STATE AND PROSPECTUS SUITABILITY STANDARDS. ASAMPLING OF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH THEFIRM APPROVED REIT TRANSACTIONS IN CONTRAVENTION OF STATESUITABILITY STANDARDS AND OCCASIONS IN WHICH IT APPROVED REITTRANSACTIONS IN VIOLATION OF THE PROSPECTUS SUITABILITYSTANDARDS; THE FIRM'S LIQUID NET WORTH DEFINITION WAS NOTCOMPARED AND ANALYZED AGAINST THE DEFINITIONS PROVIDED BYOTHER STATES AND DID NOT DEDUCT TAXES, FEES, AND PENALTIES FORAN EARLY RETIREMENT ACCOUNT WITHDRAWAL; THE FIRM'SALTERNATIVE INVESTMENT FORM (AI-1 FORM) PROVIDED INACCURATEINFORMATION TO REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL REGARDING THE COMPUTATION OF ALTERNATIVEINVESTMENT CONCENTRATION LEVELS; THE FIRM'S MANUAL SUITABILITYREVIEW OF REGISTERED REPRESENTATIVES' AND PRODUCING OFFICEOF SUPERVISORY JURISDICTION'S ALTERNATIVE INVESTMENTTRANSACTIONS WAS FLAWED; THERE WERE INADEQUATE TRAINING OFTHE FIRM'S REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL TO ANALYZE STATE SUITABILITY STANDARDS FORALTERNATIVE INVESTMENT TRANSACTIONS (E.G., REITS, BDCS,); THESUITABILITY CHART PROVIDED TO THE FIRM SUPERVISORS DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE PROSPECTUS ANDSTATE SUITABILITY STANDARDS RELATING TO CERTAIN ALTERNATIVEINVESTMENTS (E.G., REITS, BDCS AND MANAGED FUTURES); AND THEFIRM HAD NO CONTROLS TO ENSURE THAT ITS REGISTEREDREPRESENTATIVES, WHEN EFFECTING CERTAIN ALTERNATIVEINVESTMENT TRANSACTIONS (E.G. REITS, BDCS), USED THESUBSCRIPTION AGREEMENT THAT CORRESPONDED TO THE MOSTRECENT PROSPECTUS ISSUED BY THE SPONSOR (TO ENSURE THAT THECORRECT STATE SUITABILITY STANDARDS WERE EMPLOYED BY THEREGISTERED REPRESENTATIVE AND REVIEWING PERSONNEL). THEFINDINGS ALSO INCLUDED THAT DURING THE PERIOD, THE FIRM FAILEDTO IMPLEMENT WSPS THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE FINRA RULE AND STATE SUITABILITYREQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)







TO ACHIEVE COMPLIANCE WITH THE APPLICABLE FINRA RULE ANDCERTAIN STATE SUITABILITY REQUIREMENTS. DURING THE PERIOD THEFIRM HAD THE FOLLOWING SUPERVISORY DEFICIENCIES: THEAUTOMATED SYSTEM (AI DATABASE) UTILIZED BY THE FIRM TO ASSESSCONCENTRATION LEVELS FOR ALTERNATIVE INVESTMENTTRANSACTIONS, DUE TO PROGRAMMING LOGIC FAILURES, FAILED TOCONSISTENTLY IDENTIFY TRANSACTIONS THAT VIOLATED ITS OWNALTERNATIVE INVESTMENT CONCENTRATION GUIDELINES. A SAMPLINGOF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH CUSTOMERS'AGGREGATE ALTERNATIVE INVESTMENT HOLDINGS EXCEEDED THEFIRM'S CONCENTRATION GUIDELINES; THE AI DATABASE DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE INFORMATIONREGARDING STATE AND PROSPECTUS SUITABILITY STANDARDS. ASAMPLING OF REIT TRANSACTIONS REVEALED INSTANCES IN WHICH THEFIRM APPROVED REIT TRANSACTIONS IN CONTRAVENTION OF STATESUITABILITY STANDARDS AND OCCASIONS IN WHICH IT APPROVED REITTRANSACTIONS IN VIOLATION OF THE PROSPECTUS SUITABILITYSTANDARDS; THE FIRM'S LIQUID NET WORTH DEFINITION WAS NOTCOMPARED AND ANALYZED AGAINST THE DEFINITIONS PROVIDED BYOTHER STATES AND DID NOT DEDUCT TAXES, FEES, AND PENALTIES FORAN EARLY RETIREMENT ACCOUNT WITHDRAWAL; THE FIRM'SALTERNATIVE INVESTMENT FORM (AI-1 FORM) PROVIDED INACCURATEINFORMATION TO REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL REGARDING THE COMPUTATION OF ALTERNATIVEINVESTMENT CONCENTRATION LEVELS; THE FIRM'S MANUAL SUITABILITYREVIEW OF REGISTERED REPRESENTATIVES' AND PRODUCING OFFICEOF SUPERVISORY JURISDICTION'S ALTERNATIVE INVESTMENTTRANSACTIONS WAS FLAWED; THERE WERE INADEQUATE TRAINING OFTHE FIRM'S REGISTERED REPRESENTATIVES AND SUPERVISORYPERSONNEL TO ANALYZE STATE SUITABILITY STANDARDS FORALTERNATIVE INVESTMENT TRANSACTIONS (E.G., REITS, BDCS,); THESUITABILITY CHART PROVIDED TO THE FIRM SUPERVISORS DID NOTCONSISTENTLY CONTAIN CURRENT AND ACCURATE PROSPECTUS ANDSTATE SUITABILITY STANDARDS RELATING TO CERTAIN ALTERNATIVEINVESTMENTS (E.G., REITS, BDCS AND MANAGED FUTURES); AND THEFIRM HAD NO CONTROLS TO ENSURE THAT ITS REGISTEREDREPRESENTATIVES, WHEN EFFECTING CERTAIN ALTERNATIVEINVESTMENT TRANSACTIONS (E.G. REITS, BDCS), USED THESUBSCRIPTION AGREEMENT THAT CORRESPONDED TO THE MOSTRECENT PROSPECTUS ISSUED BY THE SPONSOR (TO ENSURE THAT THECORRECT STATE SUITABILITY STANDARDS WERE EMPLOYED BY THEREGISTERED REPRESENTATIVE AND REVIEWING PERSONNEL). THEFINDINGS ALSO INCLUDED THAT DURING THE PERIOD, THE FIRM FAILEDTO IMPLEMENT WSPS THAT WERE REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH THE APPLICABLE FINRA RULE AND STATE SUITABILITYREQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)






Initiated By: FINRA


Other


N/A




Other Product Type(s): ALTERNATIVE INVESTMENTS

REQUIREMENTS. THE FIRM'S WSPS FAILED TO OFFER ANY GUIDANCE TOITS REGISTERED REPRESENTATIVES OR SUPERVISORY PERSONNELREGARDING ANALYZING THE STATE SUITABILITY STANDARDS FORCERTAIN ALTERNATIVE INVESTMENT TRANSACTIONS. (CONT. IN COMMENTSECTION)


Resolution:

Other Sanctions Ordered: THE FIRM FURTHER CONSENTS TO UNDERTAKE, OR COMPLETE THEUNDERTAKING IF ALREADY UNDER WAY, A COMPREHENSIVE REVIEW OFTHE ADEQUACY OF THE FIRM'S POLICIES, SYSTEMS AND PROCEDURES(WRITTEN AND OTHERWISE) AND TRAINING RELATING TO THESUPERVISORY DEFICIENCIES ADDRESSED IN THE AWC. IN ADDITION,WITHIN 90 DAYS OF NOTICE OF ACCEPTANCE OF THIS AWC, AN OFFICEROF THE FIRM SHALL CERTIFY IN WRITING TO FINRA THAT (I) THE FIRM HASENGAGED IN THE COMPREHENSIVE REVIEW; AND (II) AS OF THE DATE OFTHE CERTIFICATION, RESPONDENT HAS IN PLACE POLICIES ANDPROCEDURES SUFFICIENT TO ADDRESS THE MATTERS IDENTIFIED INTHIS AWC.


Firm Statement (CONT. FROM ALLEGATION SECTION) - IN ADDITION, THE WSPS DID NOTREQUIRE THAT TAXES, FEES, AND PENALTIES BE DEDUCTED FROM ACUSTOMER'S LIQUID NET WORTH CALCULATION IN THE EVENT OF ANEARLY WITHDRAWAL FROM A RETIREMENT ACCOUNT. LASTLY, THE WSPSDID NOT DESCRIBE THE STEPS THAT SHOULD HAVE BEEN TAKEN BY ASUPERVISOR IN CONDUCTING A SUITABILITY REVIEW OF ALTERNATIVEINVESTMENT TRANSACTIONS.









Disclosure 11 of 54

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Initiated By: MISSOURI


Censure



Docket/Case Number: AP-13-21




Allegations: THE ENFORCEMENT SECION OF THE MISSOURI SECURITIES DIVISION OFTHE OFFICE OF THE SECRETARY OF STATE HAS ALLEGED THAT LPLFINANCIAL LLC FAILED TO REASONABLY SUPERVISE GREG JOHNCAMPBELL, A MISSOURI-REGISTERED AGENT WHO ENGAGED INDISHONEST OR UNETHICAL PRACTICES, IN VIOLATION OF SECTION 409.4-412(D)(9), RSMO. (CUM. SUPP. 2012).



Resolution:

Other Sanctions Ordered: PAY COST OF THE INVESTIGATION IN THE AMOUNT OF $10,000.00.

Sanction Details: TOTAL: $185000.00


No


Consent










Censure






Allegations: THE ENFORCEMENT SECTION OF THE MISSOURI SECURITIES DIVISION OFTHE OFFICE OF THE SECRETARY OF STATE HAS ALLEGED THAT LPLFINANCIAL LLC FAILED TO REASONABLY SUPERVISE GREG JOHNCAMPBELL, A MISSOURI-REGISTERED AGENT WHO ENGAGED INDISHONEST OR UNETHICAL PRACTICES, IN VIOLATION OF SECTION 409.4-412(D)(9), RSMO. (CUM. SUPP. 2012).



Resolution:

Other Sanctions Ordered: PAY COST OF THE INVESTIGATION IN THE AMOUNT OF $10,000.00.

Sanction Details: TOTAL: $185,000.00


Consent

Disclosure 12 of 54

i


Allegations: SECURITIES EXCHANGE ACT RULE 17A-4, FINRA RULES 2010, 4511, NASDRULES 2110, 3010(A), 3010(D)(2), 3110 - LPL FINANCIAL LLC, FROM 2008 TO2011, DID NOT REVIEW AND SUPERVISE 28 MILLION "DOING BUSINESSAS" (DBA) EMAILS SENT AND RECEIVED FROM THOUSANDS OFREPRESENTATIVES. THIS FAILURE TO SUPERVISE EMAILS OCCURREDBECAUSE: (I) THE FIRM'SPOLICIES AND PROCEDURES FAILED TO REASONABLY ENSURE THAT DBAEMAIL ADDRESSES WERE LINKED TO THE FIRM'S SUPERVISORY SYSTEM,AND (II) LPL'S SUPERVISORY SYSTEM DID NOT CAPTURE ALL DBA EMAILADDRESSES SINCE IT WAS DESIGNED TO REVIEW ONLY ONE DBA EMAILADDRESS PER REPRESENTATIVE EVENTHOUGH MANY LPL ADVISORS CONDUCTED BUSINESS USING MULTIPLEDBA EMAIL ADDRESSES. LPL WAS AWARE OF NUMEROUS RED FLAGSOVER MANY YEARS THAT ITS SUPERVISORY SYSTEM FOR THE REVIEWOF DBA EMAILS WAS NOT FUNCTIONING PROPERLY. IN FACT, FOR ALMOSTA YEAR, THE FIRM DID NOT REVIEW DBA EMAILS BECAUSE ITSSUPERVISORY SYSTEM COULD NOT ACCOMMODATE DBA EMAIL. WHENTHE FIRM DISCOVERED THAT IT WAS NOT SUPERVISING DBA EMAILS, ITSRESPONSE WAS INADEQUATE-MODIFYING ITS SYSTEM SO THAT ONLYONE DBA EMAIL ADDRESS PER REPRESENTATIVE WASINGESTED INTO ITS REVIEW SYSTEM WHILE MANY REPRESENTATIVESCONTINUED TO USE MULTIPLE DBA EMAIL ADDRESSES. A FIRM EMPLOYEEDISCOVERED THAT 2,500 DBA EMAIL ADDRESSES WERE NOT SET UP INLPL'S SUPERVISORY SYSTEM. A PROJECT WAS INITIATED TO ADD THESE2,500 DBA EMAIL ADDRESSES TO THE SUPERVISORY SYSTEM, BUT THEPROJECT WAS STOPPED BEFORE IT COULD BE COMPLETED. THE FIRMAPPROVED FUNDING OF ANOTHER PROJECT, WHICH WAS CALLED THE"TIGHTEN EMAIL CONTROLS" PROJECT BUT AFTER BEING APPROVED, THEPROJECT LANGUISHED. THE FIRM SWITCHED TO A CHEAPER EMAILARCHIVE PROVIDER. THE TRANSITION TO THE NEW PLATFORM WASFRAUGHT WITH ISSUES THAT RENDERED THE FIRM UNABLE TO RESPONDCOMPLETELY TO CERTAINREQUESTS FOR EMAILS FROM REGULATORS. THESE ISSUES ALSO LIKELYAFFECTED THE FIRM'S ABILITY TO FULLY RESPOND TO ALL REQUESTSFROM CUSTOMERS WITH ARBITRATION CLAIMS AND PRIVATE LITIGANTS.FOR ALMOST FIVE MONTHS AFTER IT SWITCHED PROVIDERS, THE FIRMHAD LIMITED ACCESS TO EMAILS SENT OR RECEIVED. THE COMPANYTHAT HAD PREVIOUSLY ARCHIVED EMAIL FOR LPL TERMINATED ITSACCESS TO EMAILS SENT OR RECEIVED. AS A RESULT, LPL LOST ACCESSTO 280 MILLION EMAILS. LPL MADE LITTLE EFFORT TO REGAIN ACCESS,AND MANUALLY LOADEDHARD DRIVES OF EMAILS FROM THE OLD ARCHIVE INTO THE NEWARCHIVE, A LABORIOUS PROCESS SO THAT FOR ABOUT 5 MONTHS, THEFIRM DID NOT HAVE ACCESS TO 280 MILLION EMAILS SENT OR RECEIVEDPRIOR TO A CERTAIN DATE. WHILE LPL BELIEVED THAT THE INGESTIONPROCESS WAS COMPLETE, IN FACT, 80 MILLION OF THE 280 MILLIONHISTORICAL EMAILS WERE CORRUPT AND COULD NOT BE ACCESSED INLPL'S NEW ARCHIVE. FIRM PERSONNEL DETECTED THIS ISSUE AND, FORSEVERAL MONTHS, IT TOOK INADEQUATE AND UNSUCCESSFUL STEPS TOACCESS THESE CORRUPTED EMAILS. FINALLY, IT WAS FORCED TOEXECUTE A CONTRACT WITH ITS OLD ARCHIVE PROVIDER TO GRANTACCESS TO THE EMAILS. THEREFORE, FOR ABOUT NINE MONTHS, LPL DIDNOT HAVE ACCESS TO 80 MILLION OF ITS 280 MILLION EMAILS THAT WERESENT OR RECEIVED. LPL DID NOT REVIEW OR ARCHIVE BLOOMBERGMESSAGES FOR SEVEN YEARS. LPL'S EXECUTIVE OFFICERS LEARNEDTHAT THE FIRM WAS NOT SUPERVISING OR ARCHIVING BLOOMBERGMESSAGES BUT DID NOT TAKE ADEQUATE STEPS TO ENSURE IT WASARCHIVING AND SURVEILLING BLOOMBERG MESSAGES. AS A RESULT, 3.5MILLION HISTORICAL BLOOMBERG MESSAGES WERE NOT ARCHIVED ORSURVEILED BY THE FIRM. IT TOOK THE FIRM TWO YEARS TO BEGINREVIEWING THESE BLOOMBERG MESSAGES, A PROCESS THAT HAS YETTO BE COMPLETED. THE FIRM'S FAILURE TO HAVE ACCESS TO ANDREVIEW BLOOMBERG MESSAGES COMPROMISED ITS ABILITY TORESPOND TO REGULATORY REQUESTS FOR CORRESPONDENCECOMPLETELY. IN RESPONSE TO REQUESTS, THE FIRM WOULD ONLYPRODUCE HARD COPY VERSIONS OF BLOOMBERG MESSAGES RETAINEDIN THE FIRM'S TRADING FILES BUT HAD NO SYSTEM OR PROCEDURE INPLACE TO ENSURE ALL MESSAGES WERE PRINTED AND SAVED.[CONTINUED IN COMMENT.]








ADDRESSES SINCE IT WAS DESIGNED TO REVIEW ONLY ONE DBA EMAILADDRESS PER REPRESENTATIVE EVENTHOUGH MANY LPL ADVISORS CONDUCTED BUSINESS USING MULTIPLEDBA EMAIL ADDRESSES. LPL WAS AWARE OF NUMEROUS RED FLAGSOVER MANY YEARS THAT ITS SUPERVISORY SYSTEM FOR THE REVIEWOF DBA EMAILS WAS NOT FUNCTIONING PROPERLY. IN FACT, FOR ALMOSTA YEAR, THE FIRM DID NOT REVIEW DBA EMAILS BECAUSE ITSSUPERVISORY SYSTEM COULD NOT ACCOMMODATE DBA EMAIL. WHENTHE FIRM DISCOVERED THAT IT WAS NOT SUPERVISING DBA EMAILS, ITSRESPONSE WAS INADEQUATE-MODIFYING ITS SYSTEM SO THAT ONLYONE DBA EMAIL ADDRESS PER REPRESENTATIVE WASINGESTED INTO ITS REVIEW SYSTEM WHILE MANY REPRESENTATIVESCONTINUED TO USE MULTIPLE DBA EMAIL ADDRESSES. A FIRM EMPLOYEEDISCOVERED THAT 2,500 DBA EMAIL ADDRESSES WERE NOT SET UP INLPL'S SUPERVISORY SYSTEM. A PROJECT WAS INITIATED TO ADD THESE2,500 DBA EMAIL ADDRESSES TO THE SUPERVISORY SYSTEM, BUT THEPROJECT WAS STOPPED BEFORE IT COULD BE COMPLETED. THE FIRMAPPROVED FUNDING OF ANOTHER PROJECT, WHICH WAS CALLED THE"TIGHTEN EMAIL CONTROLS" PROJECT BUT AFTER BEING APPROVED, THEPROJECT LANGUISHED. THE FIRM SWITCHED TO A CHEAPER EMAILARCHIVE PROVIDER. THE TRANSITION TO THE NEW PLATFORM WASFRAUGHT WITH ISSUES THAT RENDERED THE FIRM UNABLE TO RESPONDCOMPLETELY TO CERTAINREQUESTS FOR EMAILS FROM REGULATORS. THESE ISSUES ALSO LIKELYAFFECTED THE FIRM'S ABILITY TO FULLY RESPOND TO ALL REQUESTSFROM CUSTOMERS WITH ARBITRATION CLAIMS AND PRIVATE LITIGANTS.FOR ALMOST FIVE MONTHS AFTER IT SWITCHED PROVIDERS, THE FIRMHAD LIMITED ACCESS TO EMAILS SENT OR RECEIVED. THE COMPANYTHAT HAD PREVIOUSLY ARCHIVED EMAIL FOR LPL TERMINATED ITSACCESS TO EMAILS SENT OR RECEIVED. AS A RESULT, LPL LOST ACCESSTO 280 MILLION EMAILS. LPL MADE LITTLE EFFORT TO REGAIN ACCESS,AND MANUALLY LOADEDHARD DRIVES OF EMAILS FROM THE OLD ARCHIVE INTO THE NEWARCHIVE, A LABORIOUS PROCESS SO THAT FOR ABOUT 5 MONTHS, THEFIRM DID NOT HAVE ACCESS TO 280 MILLION EMAILS SENT OR RECEIVEDPRIOR TO A CERTAIN DATE. WHILE LPL BELIEVED THAT THE INGESTIONPROCESS WAS COMPLETE, IN FACT, 80 MILLION OF THE 280 MILLIONHISTORICAL EMAILS WERE CORRUPT AND COULD NOT BE ACCESSED INLPL'S NEW ARCHIVE. FIRM PERSONNEL DETECTED THIS ISSUE AND, FORSEVERAL MONTHS, IT TOOK INADEQUATE AND UNSUCCESSFUL STEPS TOACCESS THESE CORRUPTED EMAILS. FINALLY, IT WAS FORCED TOEXECUTE A CONTRACT WITH ITS OLD ARCHIVE PROVIDER TO GRANTACCESS TO THE EMAILS. THEREFORE, FOR ABOUT NINE MONTHS, LPL DIDNOT HAVE ACCESS TO 80 MILLION OF ITS 280 MILLION EMAILS THAT WERESENT OR RECEIVED. LPL DID NOT REVIEW OR ARCHIVE BLOOMBERGMESSAGES FOR SEVEN YEARS. LPL'S EXECUTIVE OFFICERS LEARNEDTHAT THE FIRM WAS NOT SUPERVISING OR ARCHIVING BLOOMBERGMESSAGES BUT DID NOT TAKE ADEQUATE STEPS TO ENSURE IT WASARCHIVING AND SURVEILLING BLOOMBERG MESSAGES. AS A RESULT, 3.5MILLION HISTORICAL BLOOMBERG MESSAGES WERE NOT ARCHIVED ORSURVEILED BY THE FIRM. IT TOOK THE FIRM TWO YEARS TO BEGINREVIEWING THESE BLOOMBERG MESSAGES, A PROCESS THAT HAS YETTO BE COMPLETED. THE FIRM'S FAILURE TO HAVE ACCESS TO ANDREVIEW BLOOMBERG MESSAGES COMPROMISED ITS ABILITY TORESPOND TO REGULATORY REQUESTS FOR CORRESPONDENCECOMPLETELY. IN RESPONSE TO REQUESTS, THE FIRM WOULD ONLYPRODUCE HARD COPY VERSIONS OF BLOOMBERG MESSAGES RETAINEDIN THE FIRM'S TRADING FILES BUT HAD NO SYSTEM OR PROCEDURE INPLACE TO ENSURE ALL MESSAGES WERE PRINTED AND SAVED.[CONTINUED IN COMMENT.]






Initiated By: FINRA







MESSAGES FOR SEVEN YEARS. LPL'S EXECUTIVE OFFICERS LEARNEDTHAT THE FIRM WAS NOT SUPERVISING OR ARCHIVING BLOOMBERGMESSAGES BUT DID NOT TAKE ADEQUATE STEPS TO ENSURE IT WASARCHIVING AND SURVEILLING BLOOMBERG MESSAGES. AS A RESULT, 3.5MILLION HISTORICAL BLOOMBERG MESSAGES WERE NOT ARCHIVED ORSURVEILED BY THE FIRM. IT TOOK THE FIRM TWO YEARS TO BEGINREVIEWING THESE BLOOMBERG MESSAGES, A PROCESS THAT HAS YETTO BE COMPLETED. THE FIRM'S FAILURE TO HAVE ACCESS TO ANDREVIEW BLOOMBERG MESSAGES COMPROMISED ITS ABILITY TORESPOND TO REGULATORY REQUESTS FOR CORRESPONDENCECOMPLETELY. IN RESPONSE TO REQUESTS, THE FIRM WOULD ONLYPRODUCE HARD COPY VERSIONS OF BLOOMBERG MESSAGES RETAINEDIN THE FIRM'S TRADING FILES BUT HAD NO SYSTEM OR PROCEDURE INPLACE TO ENSURE ALL MESSAGES WERE PRINTED AND SAVED.[CONTINUED IN COMMENT.]


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED 7.5 MILLION AND REQUIREDWITHIN 30 DAYS OF THE DATE THE AWC IS ACCEPTED, TO DEPOSIT $1.5MILLION INTO AN ESCROW ACCOUNT TO ESTABLISH A FUND (THE "FUND")TO MAKE PAYMENTS TO BROKERAGE CUSTOMER CLAIMANTS INARBITRATIONS OR LITIGATIONS BROUGHT AGAINST LPL INITIATED ON ORAFTER, OR STILL OPEN AS OF, JANUARY 1, 2007, AND WHICH WERECLOSED ON OR BEFORE DECEMBER 17, 2012 ("ELIGIBLE CLAIMANTS").THOSE PAYMENTS SHALL REPRESENT DISCOVERY SANCTIONS FOR LPL'SLIKELY FAILURE TO PRODUCE ALL RESPONSIVE EMAILS IN CERTAIN OFSUCH MATTERS. ANY FUNDS REMAINING IN THE FUND, AFTER PAYMENTOF ALL AMOUNTS TO ELIGIBLE CLAIMANTS, WILL REVERT TO FINRA AS ANADDITIONAL FINE AMOUNT. IN NO EVENT, SHALL SUCH ADDITIONAL FINEAMOUNT EXCEED $1.5 MILLION. LPL HAS RETAINED AN EMAILCONSULTING FIRM TO HELP IT ADDRESS AND REMEDIATE ITS EMAILRETENTION AND REVIEW DEFICIENCIES. WITHIN 60 DAYS OF THE DATETHIS AWC IS ACCEPTED, LPL SHALL PROVIDE A REPORT TO FINRASETTING FORTH ITS REMEDIAL PLAN. WITHIN 180 DAYS OF THE DATE THISAWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALL CERTIFY IN WRITINGTO FINRA STAFF THAT THE FIRM HAS ESTABLISHED SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE BOOKS AND RECORDS AND THE SUPERVISION REQUIREMENTSRELATED TO EMAILS. WITHIN 30 DAYS OF THE DATE THIS AWC ISACCEPTED, LPL SHALL PROVIDE FINRA STAFF WITH A LIST OF ALLREGULATORY AGENCIES THAT RECEIVED POTENTIALLY INCOMPLETEPRODUCTION OF EMAIL IN RESPONSE TO REQUESTS OR SUBPOENASSENT FROM JANUARY 1, 2007 TO DECEMBER 17, 2012. WITHIN 60 DAYS OFTHE DATE THIS AWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALLCERTIFY IN WRITING TO FINRA STAFF THAT THE FIRM HAS NOTIFIED ALLSUCH REGULATORY AGENCIES OF ITS POTENTIALLY INCOMPLETE EMAILPRODUCTIONS. FINE PAID ON JUNE 7, 2013. AN ADDITIONAL FINE AMOUNTOF $551,500 WAS PAID TO FINRA ON 5/11/2015.


No

Sanctions Ordered: CensureMonetary/Fine $7,500,000.00








WITHIN 30 DAYS OF THE DATE THE AWC IS ACCEPTED, TO DEPOSIT $1.5MILLION INTO AN ESCROW ACCOUNT TO ESTABLISH A FUND (THE "FUND")TO MAKE PAYMENTS TO BROKERAGE CUSTOMER CLAIMANTS INARBITRATIONS OR LITIGATIONS BROUGHT AGAINST LPL INITIATED ON ORAFTER, OR STILL OPEN AS OF, JANUARY 1, 2007, AND WHICH WERECLOSED ON OR BEFORE DECEMBER 17, 2012 ("ELIGIBLE CLAIMANTS").THOSE PAYMENTS SHALL REPRESENT DISCOVERY SANCTIONS FOR LPL'SLIKELY FAILURE TO PRODUCE ALL RESPONSIVE EMAILS IN CERTAIN OFSUCH MATTERS. ANY FUNDS REMAINING IN THE FUND, AFTER PAYMENTOF ALL AMOUNTS TO ELIGIBLE CLAIMANTS, WILL REVERT TO FINRA AS ANADDITIONAL FINE AMOUNT. IN NO EVENT, SHALL SUCH ADDITIONAL FINEAMOUNT EXCEED $1.5 MILLION. LPL HAS RETAINED AN EMAILCONSULTING FIRM TO HELP IT ADDRESS AND REMEDIATE ITS EMAILRETENTION AND REVIEW DEFICIENCIES. WITHIN 60 DAYS OF THE DATETHIS AWC IS ACCEPTED, LPL SHALL PROVIDE A REPORT TO FINRASETTING FORTH ITS REMEDIAL PLAN. WITHIN 180 DAYS OF THE DATE THISAWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALL CERTIFY IN WRITINGTO FINRA STAFF THAT THE FIRM HAS ESTABLISHED SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE BOOKS AND RECORDS AND THE SUPERVISION REQUIREMENTSRELATED TO EMAILS. WITHIN 30 DAYS OF THE DATE THIS AWC ISACCEPTED, LPL SHALL PROVIDE FINRA STAFF WITH A LIST OF ALLREGULATORY AGENCIES THAT RECEIVED POTENTIALLY INCOMPLETEPRODUCTION OF EMAIL IN RESPONSE TO REQUESTS OR SUBPOENASSENT FROM JANUARY 1, 2007 TO DECEMBER 17, 2012. WITHIN 60 DAYS OFTHE DATE THIS AWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALLCERTIFY IN WRITING TO FINRA STAFF THAT THE FIRM HAS NOTIFIED ALLSUCH REGULATORY AGENCIES OF ITS POTENTIALLY INCOMPLETE EMAILPRODUCTIONS. FINE PAID ON JUNE 7, 2013. AN ADDITIONAL FINE AMOUNTOF $551,500 WAS PAID TO FINRA ON 5/11/2015.

Regulator Statement ALLEGATIONS CONTINUED: THE FIRM DID NOT REVIEW THE EMAILS OFANY OF ITS REGISTERED EMPLOYEES, SUCH AS HOME OFFICEPERSONNEL, WHO SHOULD HAVE ALSO BEEN SUBJECT TO SUPERVISIONIN ADDITION TO ITS INDEPENDENT ADVISORS. THE FIRM ALLOWED ITSREGISTERED REPRESENTATIVES TO SEND EMAILS THROUGHTHIRD-PARTY EMAIL-BASED ADVERTISEMENT PLATFORMS. FIRMPERSONNEL KNEW THAT THE EMAILS TRANSMITTING THESEADVERTISEMENTS THROUGH THESE PLATFORMS WERE NOT BEINGARCHIVED. THE FIRMATTEMPTED TO ADDRESS THIS ISSUE BY REQUIRING ITSREPRESENTATIVES TO COPY THEIR OWN LPL EMAIL ADDRESS ON ANYMESSAGES SENT TO CUSTOMERS USING THE ADVERTISING PLATFORMSBUT TOOK INADEQUATE STEPS TO ENSURE THE REPRESENTATIVESWERE COMPLYING WITH THIS REQUIREMENT. THREE DIFFERENTFINANCIAL INSTITUTIONS HAD PROBLEMS TRANSFERRING THEIR EMAILSTO LPL'S SYSTEM. THIS RESULTED IN APPROXIMATELY 700,000 TOTALEMAILS NOT BEING SUPERVISED BY THE FIRM. LPL'S INADEQUATESYSTEMS AND PROCEDURES RELATING TO EMAILS CAUSED THE FIRM TOPROVIDE INCOMPLETE RESPONSES TO EMAIL REQUESTS IN CERTAINREGULATORY INVESTIGATIONS AND EXAMS. THESE SAMESHORTCOMINGS ALSO LIKELY AFFECTED THE FIRM'S ABILITY TO FULLYRESPOND TO ALL REQUESTS FROM CUSTOMERS WITH ARBITRATIONCLAIMS AND PRIVATE LITIGANTS. LPL REPORTED ITS DBA EMAIL ISSUE TOFINRA, PURSUANT TO FINRA RULE 4530. FINRA STAFF ASKED FORADDITIONAL INFORMATION CONCERNING HOW AND WHEN THE PROBLEMWAS DISCOVERED. LPL RESPONDED TO FINRA'S REQUEST WITH A COVERLETTER AND CHRONOLOGY OF EVENTS CONCERNING THE DISCOVERYOF THE DBA EMAIL ISSUE. THE LETTER AND CHRONOLOGY MADE TWOMATERIAL MISSTATEMENTS REGARDING WHEN THE FIRM WAS AWARE OFPROBLEMS.






TO LPL'S SYSTEM. THIS RESULTED IN APPROXIMATELY 700,000 TOTALEMAILS NOT BEING SUPERVISED BY THE FIRM. LPL'S INADEQUATESYSTEMS AND PROCEDURES RELATING TO EMAILS CAUSED THE FIRM TOPROVIDE INCOMPLETE RESPONSES TO EMAIL REQUESTS IN CERTAINREGULATORY INVESTIGATIONS AND EXAMS. THESE SAMESHORTCOMINGS ALSO LIKELY AFFECTED THE FIRM'S ABILITY TO FULLYRESPOND TO ALL REQUESTS FROM CUSTOMERS WITH ARBITRATIONCLAIMS AND PRIVATE LITIGANTS. LPL REPORTED ITS DBA EMAIL ISSUE TOFINRA, PURSUANT TO FINRA RULE 4530. FINRA STAFF ASKED FORADDITIONAL INFORMATION CONCERNING HOW AND WHEN THE PROBLEMWAS DISCOVERED. LPL RESPONDED TO FINRA'S REQUEST WITH A COVERLETTER AND CHRONOLOGY OF EVENTS CONCERNING THE DISCOVERYOF THE DBA EMAIL ISSUE. THE LETTER AND CHRONOLOGY MADE TWOMATERIAL MISSTATEMENTS REGARDING WHEN THE FIRM WAS AWARE OFPROBLEMS.


Allegations: SECURITIES EXCHANGE ACT RULE 17A-4, FINRA RULES 2010, 4511, NASDRULES 2110, 3010(A), 3010(D)(2), 3110 - LPL FINANCIAL LLC, FROM 2008 TO2011, DID NOT REVIEW AND SUPERVISE 28 MILLION "DOING BUSINESSAS" (DBA) EMAILS SENT AND RECEIVED FROM THOUSANDS OFREPRESENTATIVES. THIS FAILURE TO SUPERVISE EMAILS OCCURREDBECAUSE: (I) THE FIRM'S POLICIES AND PROCEDURES FAILED TOREASONABLY ENSURE THAT DBA EMAIL ADDRESSES WERE LINKED TOTHE FIRM'S SUPERVISORY SYSTEM, AND (II) LPL'S SUPERVISORY SYSTEMDID NOT CAPTURE ALL DBA EMAIL ADDRESSES SINCE IT WAS DESIGNEDTO REVIEW ONLY ONE DBA EMAIL ADDRESS PER REPRESENTATIVE EVENTHOUGH MANY LPL ADVISORS CONDUCTED BUSINESS USING MULTIPLEDBA EMAIL ADDRESSES. LPL WAS AWARE OF NUMEROUS RED FLAGSOVER MANY YEARS THAT ITS SUPERVISORY SYSTEM FOR THE REVIEW OFDBA EMAILS WAS NOT FUNCTIONING PROPERLY. IN FACT, FOR ALMOST AYEAR, THE FIRM DID NOT REVIEW DBA EMAILS BECAUSE ITSSUPERVISORY SYSTEM COULD NOT ACCOMMODATE DBA EMAIL. WHENTHE FIRM DISCOVERED THAT IT WAS NOT SUPERVISING DBA EMAILS, ITSRESPONSE WAS INADEQUATE-MODIFYING ITS SYSTEM SO THAT ONLYONE DBA EMAIL ADDRESS PER REPRESENTATIVE WAS INGESTED INTO ITSREVIEW SYSTEM WHILE MANY REPRESENTATIVES CONTINUED TO USEMULTIPLE DBA EMAIL ADDRESSES. A FIRM EMPLOYEE DISCOVERED THAT2,500 DBA EMAIL ADDRESSES WERE NOT SET UP IN LPL'S SUPERVISORYSYSTEM. A PROJECT WAS INITIATED TO ADD THESE 2,500 DBA EMAILADDRESSES TO THE SUPERVISORY SYSTEM, BUT THE PROJECT WASSTOPPED BEFORE IT COULD BE COMPLETED. THE FIRM APPROVEDFUNDING OF ANOTHER PROJECT, WHICH WAS CALLED THE "TIGHTENEMAIL CONTROLS" PROJECT BUT AFTER BEING APPROVED, THE PROJECTLANGUISHED. THE FIRM SWITCHED TO A CHEAPER EMAIL ARCHIVEPROVIDER. THE TRANSITION TO THE NEW PLATFORM WAS FRAUGHT WITHISSUES THAT RENDERED THE FIRM UNABLE TO RESPOND COMPLETELYTO CERTAIN REQUESTS FOR EMAILS FROM REGULATORS. THESE ISSUESALSO LIKELY AFFECTED THE FIRM'S ABILITY TO FULLY RESPOND TO ALLREQUESTS FROM CUSTOMERS WITH ARBITRATION CLAIMS AND PRIVATELITIGANTS. FOR ALMOST FIVE MONTHS AFTER IT SWITCHED PROVIDERS,THE FIRM HAD LIMITED ACCESS TO EMAILS SENT OR RECEIVED. THECOMPANY THAT HAD PREVIOUSLY ARCHIVED EMAIL FOR LPL TERMINATEDITS ACCESS TO EMAILS SENT OR RECEIVED. AS A RESULT, LPL LOSTACCESS TO 280 MILLION EMAILS. LPL MADE LITTLE EFFORT TO REGAINACCESS, AND MANUALLY LOADED HARD DRIVES OF EMAILS FROM THEOLD ARCHIVE INTO THE NEW ARCHIVE, A LABORIOUS PROCESS SO THATFOR ABOUT 5 MONTHS, THE FIRM DID NOT HAVE ACCESS TO 280 MILLIONEMAILS SENT OR RECEIVED PRIOR TO A CERTAIN DATE. WHILE LPLBELIEVED THAT THE INGESTION PROCESS WAS COMPLETE, IN FACT, 80MILLION OF THE 280 MILLION HISTORICAL EMAILS WERE CORRUPT ANDCOULD NOT BE ACCESSED IN LPL'S NEW ARCHIVE. FIRM PERSONNELDETECTED THIS ISSUE AND, FOR SEVERAL MONTHS, IT TOOKINADEQUATE AND UNSUCCESSFUL STEPS TO ACCESS THESECORRUPTED EMAILS. FINALLY, IT WAS FORCED TO EXECUTE A CONTRACTWITH ITS OLD ARCHIVE PROVIDER TO GRANT ACCESS TO THE EMAILS.THEREFORE, FOR ABOUT NINE MONTHS, LPL DID NOT HAVE ACCESS TO80 MILLION OF ITS 280 MILLION EMAILS THAT WERE SENT OR RECEIVED.LPL DID NOT REVIEW OR ARCHIVE BLOOMBERG MESSAGES FOR SEVENYEARS. LPL'S EXECUTIVE OFFICERS LEARNED THAT THE FIRM WAS NOTSUPERVISING OR ARCHIVING BLOOMBERG MESSAGES BUT DID NOT TAKEADEQUATE STEPS TO ENSURE IT WAS ARCHIVING AND SURVEILLINGBLOOMBERG MESSAGES. AS A RESULT, 3.5 MILLION HISTORICALBLOOMBERG MESSAGES WERE NOT ARCHIVED OR SURVEILED BY THEFIRM. IT TOOK THE FIRM TWO YEARS TO BEGIN REVIEWING THESEBLOOMBERG MESSAGES, A PROCESS THAT HAS YET TO BE COMPLETED.THE FIRM'S FAILURE TO HAVE ACCESS TO AND REVIEW BLOOMBERGMESSAGES COMPROMISED ITS ABILITY TO RESPOND TO REGULATORYREQUESTS FOR CORRESPONDENCE COMPLETELY. IN RESPONSE TOREQUESTS, THE FIRM WOULD ONLY PRODUCE HARD COPY VERSIONS OFBLOOMBERG MESSAGES RETAINED IN THE FIRM'S TRADING FILES BUTHAD NO SYSTEM OR PROCEDURE IN PLACE TO ENSURE ALL MESSAGESWERE PRINTED AND SAVED. [CONTINUED IN COMMENT.]







Initiated By: FINRA



FUNDING OF ANOTHER PROJECT, WHICH WAS CALLED THE "TIGHTENEMAIL CONTROLS" PROJECT BUT AFTER BEING APPROVED, THE PROJECTLANGUISHED. THE FIRM SWITCHED TO A CHEAPER EMAIL ARCHIVEPROVIDER. THE TRANSITION TO THE NEW PLATFORM WAS FRAUGHT WITHISSUES THAT RENDERED THE FIRM UNABLE TO RESPOND COMPLETELYTO CERTAIN REQUESTS FOR EMAILS FROM REGULATORS. THESE ISSUESALSO LIKELY AFFECTED THE FIRM'S ABILITY TO FULLY RESPOND TO ALLREQUESTS FROM CUSTOMERS WITH ARBITRATION CLAIMS AND PRIVATELITIGANTS. FOR ALMOST FIVE MONTHS AFTER IT SWITCHED PROVIDERS,THE FIRM HAD LIMITED ACCESS TO EMAILS SENT OR RECEIVED. THECOMPANY THAT HAD PREVIOUSLY ARCHIVED EMAIL FOR LPL TERMINATEDITS ACCESS TO EMAILS SENT OR RECEIVED. AS A RESULT, LPL LOSTACCESS TO 280 MILLION EMAILS. LPL MADE LITTLE EFFORT TO REGAINACCESS, AND MANUALLY LOADED HARD DRIVES OF EMAILS FROM THEOLD ARCHIVE INTO THE NEW ARCHIVE, A LABORIOUS PROCESS SO THATFOR ABOUT 5 MONTHS, THE FIRM DID NOT HAVE ACCESS TO 280 MILLIONEMAILS SENT OR RECEIVED PRIOR TO A CERTAIN DATE. WHILE LPLBELIEVED THAT THE INGESTION PROCESS WAS COMPLETE, IN FACT, 80MILLION OF THE 280 MILLION HISTORICAL EMAILS WERE CORRUPT ANDCOULD NOT BE ACCESSED IN LPL'S NEW ARCHIVE. FIRM PERSONNELDETECTED THIS ISSUE AND, FOR SEVERAL MONTHS, IT TOOKINADEQUATE AND UNSUCCESSFUL STEPS TO ACCESS THESECORRUPTED EMAILS. FINALLY, IT WAS FORCED TO EXECUTE A CONTRACTWITH ITS OLD ARCHIVE PROVIDER TO GRANT ACCESS TO THE EMAILS.THEREFORE, FOR ABOUT NINE MONTHS, LPL DID NOT HAVE ACCESS TO80 MILLION OF ITS 280 MILLION EMAILS THAT WERE SENT OR RECEIVED.LPL DID NOT REVIEW OR ARCHIVE BLOOMBERG MESSAGES FOR SEVENYEARS. LPL'S EXECUTIVE OFFICERS LEARNED THAT THE FIRM WAS NOTSUPERVISING OR ARCHIVING BLOOMBERG MESSAGES BUT DID NOT TAKEADEQUATE STEPS TO ENSURE IT WAS ARCHIVING AND SURVEILLINGBLOOMBERG MESSAGES. AS A RESULT, 3.5 MILLION HISTORICALBLOOMBERG MESSAGES WERE NOT ARCHIVED OR SURVEILED BY THEFIRM. IT TOOK THE FIRM TWO YEARS TO BEGIN REVIEWING THESEBLOOMBERG MESSAGES, A PROCESS THAT HAS YET TO BE COMPLETED.THE FIRM'S FAILURE TO HAVE ACCESS TO AND REVIEW BLOOMBERGMESSAGES COMPROMISED ITS ABILITY TO RESPOND TO REGULATORYREQUESTS FOR CORRESPONDENCE COMPLETELY. IN RESPONSE TOREQUESTS, THE FIRM WOULD ONLY PRODUCE HARD COPY VERSIONS OFBLOOMBERG MESSAGES RETAINED IN THE FIRM'S TRADING FILES BUTHAD NO SYSTEM OR PROCEDURE IN PLACE TO ENSURE ALL MESSAGESWERE PRINTED AND SAVED. [CONTINUED IN COMMENT.]












Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED 7.5 MILLION AND REQUIREDWITHIN 30 DAYS OF THE DATE THE AWC IS ACCEPTED, TO DEPOSIT $1.5MILLION INTO AN ESCROW ACCOUNT TO ESTABLISH A FUND (THE "FUND")TO MAKE PAYMENTS TO BROKERAGE CUSTOMER CLAIMANTS INARBITRATIONS OR LITIGATIONS BROUGHT AGAINST LPL INITIATED ON ORAFTER, OR STILL OPEN AS OF, JANUARY 1, 2007, AND WHICH WERECLOSED ON OR BEFORE DECEMBER 17, 2012 ("ELIGIBLE CLAIMANTS").THOSE PAYMENTS SHALL REPRESENT DISCOVERY SANCTIONS FOR LPL'SLIKELY FAILURE TO PRODUCE ALL RESPONSIVE EMAILS IN CERTAIN OFSUCH MATTERS. ANY FUNDS REMAINING IN THE FUND, AFTER PAYMENTOF ALL AMOUNTS TO ELIGIBLE CLAIMANTS, WILL REVERT TO FINRA AS ANADDITIONAL FINE AMOUNT. IN NO EVENT, SHALL SUCH ADDITIONAL FINEAMOUNT EXCEED $1.5 MILLION. LPL HAS RETAINED AN EMAILCONSULTING FIRM TO HELP IT ADDRESS AND REMEDIATE ITS EMAILRETENTION AND REVIEW DEFICIENCIES. WITHIN 60 DAYS OF THE DATETHIS AWC IS ACCEPTED, LPL SHALL PROVIDE A REPORT TO FINRASETTING FORTH ITS REMEDIAL PLAN. WITHIN 180 DAYS OF THE DATE THISAWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALL CERTIFY IN WRITINGTO FINRA STAFF THAT THE FIRM HAS ESTABLISHED SYSTEMS ANDPROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITHTHE BOOKS AND RECORDS AND THE SUPERVISION REQUIREMENTSRELATED TO EMAILS, INCLUDING BUT NOT LIMITED TO, THE DEFICIENCIESIDENTIFIED HEREIN. WITHIN 30 DAYS OF THE DATE THIS AWC ISACCEPTED, LPL SHALL PROVIDE FINRA STAFF WITH A LIST OF ALLREGULATORY AGENCIES THAT RECEIVED POTENTIALLY INCOMPLETEPRODUCTION OF EMAIL IN RESPONSE TO REQUESTS OR SUBPOENASSENT FROM JANUARY 1, 2007 TO DECEMBER 17, 2012. WITHIN 60 DAYS OFTHE DATE THIS AWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALLCERTIFY IN WRITING TO FINRA STAFF THAT THE FIRM HAS NOTIFIED ALLSUCH REGULATORY AGENCIES OF ITS POTENTIALLY INCOMPLETE EMAILPRODUCTIONS.








THE DATE THIS AWC IS ACCEPTED, A PRINCIPAL OF THE FIRM SHALLCERTIFY IN WRITING TO FINRA STAFF THAT THE FIRM HAS NOTIFIED ALLSUCH REGULATORY AGENCIES OF ITS POTENTIALLY INCOMPLETE EMAILPRODUCTIONS.

Firm Statement ALLEGATIONS CONTINUED: THE FIRM DID NOT REVIEW THE EMAILS OFANY OF ITS REGISTERED EMPLOYEES, SUCH AS HOME OFFICEPERSONNEL, WHO SHOULD HAVE ALSO BEEN SUBJECT TO SUPERVISIONIN ADDITION TO ITS INDEPENDENT ADVISORS. THE FIRM ALLOWED ITSREGISTERED REPRESENTATIVES TO SEND EMAILS THROUGHTHIRD-PARTY EMAIL-BASED ADVERTISEMENT PLATFORMS. FIRMPERSONNEL KNEW THAT THE EMAILS TRANSMITTING THESEADVERTISEMENTS THROUGH THESE PLATFORMS WERE NOT BEINGARCHIVED. THE FIRM ATTEMPTED TO ADDRESS THIS ISSUE BY REQUIRINGITS REPRESENTATIVES TO COPY THEIR OWN LPL EMAIL ADDRESS ON ANYMESSAGES SENT TO CUSTOMERS USING THE ADVERTISING PLATFORMSBUT TOOK INADEQUATE STEPS TO ENSURE THE REPRESENTATIVESWERE COMPLYING WITH THIS REQUIREMENT. THREE DIFFERENTFINANCIAL INSTITUTIONS HAD PROBLEMS TRANSFERRING THEIR EMAILSTO LPL'S SYSTEM. THIS RESULTED IN APPROXIMATELY 700,000 TOTALEMAILS NOT BEING SUPERVISED BY THE FIRM. LPL'S INADEQUATESYSTEMS AND PROCEDURES RELATING TO EMAILS CAUSED THE FIRM TOPROVIDE INCOMPLETE RESPONSES TO EMAIL REQUESTS IN CERTAINREGULATORY INVESTIGATIONS AND EXAMS. THESE SAMESHORTCOMINGS ALSO LIKELY AFFECTED THE FIRM'S ABILITY TO FULLYRESPOND TO ALL REQUESTS FROM CUSTOMERS WITH ARBITRATIONCLAIMS AND PRIVATE LITIGANTS. LPL REPORTED ITS DBA EMAIL ISSUE TOFINRA, PURSUANT TO FINRA RULE 4530. FINRA STAFF ASKED FORADDITIONAL INFORMATION CONCERNING HOW AND WHEN THE PROBLEMWAS DISCOVERED. LPL RESPONDED TO FINRA'S REQUEST WITH A COVERLETTER AND CHRONOLOGY OF EVENTS CONCERNING THE DISCOVERYOF THE DBA EMAIL ISSUE. THE LETTER AND CHRONOLOGY MADE TWOMATERIAL MISSTATEMENTS REGARDING WHEN THE FIRM WAS AWARE OFPROBLEMS. FINE PAID ON JUNE 7, 2013.

Disclosure 13 of 54

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Allegations: FINRA RULE 2010, NASD RULE 2320, AND MSRB RULES G-17 AND G-30:THE FIRM PURCHASED MUNICIPAL SECURITIES FOR ITS OWN ACCOUNTFROM A CUSTOMER AND/OR SOLD MUNICIPAL SECURITIES FOR ITS OWNACCOUNT TO A CUSTOMER AT AN AGGREGATE PRICE (INCLUDING ANYCOMMISSION OR SERVICE CHARGE) THAT WAS NOT FAIR ANDREASONABLE, TAKING INTO CONSIDERATION ALL RELEVANT FACTORS,INCLUDING THE BEST JUDGMENT OF THE BROKER, DEALER ORMUNICIPAL SECURITIES DEALER AS TO THE FAIR MARKET VALUE OF THESECURITIES AT THE TIME OF THE TRANSACTION AND OF ANY SECURITIESEXCHANGED OR TRADED IN CONNECTION WITH THE TRANSACTION, THEEXPENSE INVOLVED IN EFFECTING THE TRANSACTION, THE FACT THATTHE BROKER, DEALER, OR MUNICIPAL SECURITIES DEALER IS ENTITLEDTO A PROFIT, AND THE TOTAL DOLLAR AMOUNT OF THE TRANSACTION.IN CORPORATE BOND TRANSACTIONS, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS.THE FIRM SUBMITTED EVIDENCE THAT IT MADE RESTITUTION TO EACH OFTHE AFFECTED CUSTOMERS.







Initiated By: FINRA


Other


N/A



Principal Product Type: Debt - Municipal

Other Product Type(s): CORPORATE BONDS

REASONABLE, TAKING INTO CONSIDERATION ALL RELEVANT FACTORS,INCLUDING THE BEST JUDGMENT OF THE BROKER, DEALER ORMUNICIPAL SECURITIES DEALER AS TO THE FAIR MARKET VALUE OF THESECURITIES AT THE TIME OF THE TRANSACTION AND OF ANY SECURITIESEXCHANGED OR TRADED IN CONNECTION WITH THE TRANSACTION, THEEXPENSE INVOLVED IN EFFECTING THE TRANSACTION, THE FACT THATTHE BROKER, DEALER, OR MUNICIPAL SECURITIES DEALER IS ENTITLEDTO A PROFIT, AND THE TOTAL DOLLAR AMOUNT OF THE TRANSACTION.IN CORPORATE BOND TRANSACTIONS, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS.THE FIRM SUBMITTED EVIDENCE THAT IT MADE RESTITUTION TO EACH OFTHE AFFECTED CUSTOMERS.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $60,000, COMPRISED OFA $36,000 FINE FOR MSRB RULE G-17 AND G-30 VIOLATIONS, AND A $24,000FINE FOR THE FINRA RULE 2010 AND NASD RULE 2320 VIOLATIONS. FINEPAID ON JUNE 6, 2013.


No









A $36,000 FINE FOR MSRB RULE G-17 AND G-30 VIOLATIONS, AND A $24,000FINE FOR THE FINRA RULE 2010 AND NASD RULE 2320 VIOLATIONS. FINEPAID ON JUNE 6, 2013.


Initiated By: FINRA


Other


N/A




Other Product Type(s): CORPORATE BONDS

Allegations: FINRA RULE 2010, NASD RULE 2320, AND MSRB RULES G-17 AND G-30: THEFIRM PURCHASED MUNICIPAL SECURITIES FOR ITS OWN ACCOUNT FROMA CUSTOMER AND/OR SOLD MUNICIPAL SECURITIES FOR ITS OWNACCOUNT TO A CUSTOMER AT AN AGGREGATE PRICE (INCLUDING ANYCOMMISSION OR SERVICE CHARGE) THAT WAS NOT FAIR ANDREASONABLE, TAKING INTO CONSIDERATION ALL RELEVANT FACTORS,INCLUDING THE BEST JUDGMENT OF THE BROKER, DEALER ORMUNICIPAL SECURITIES DEALER AS TO THE FAIR MARKET VALUE OF THESECURITIES AT THE TIME OF THE TRANSACTION AND OF ANY SECURITIESEXCHANGED OR TRADED IN CONNECTION WITH THE TRANSACTION, THEEXPENSE INVOLVED IN EFFECTING THE TRANSACTION, THE FACT THATTHE BROKER, DEALER, OR MUNICIPAL SECURITIES DEALER IS ENTITLEDTO A PROFIT, AND THE TOTAL DOLLAR AMOUNT OF THE TRANSACTION. INCORPORATE BOND TRANSACTIONS, THE FIRM FAILED TO USEREASONABLE DILIGENCE TO ASCERTAIN THE BEST INTER-DEALERMARKET AND FAILED TO BUY OR SELL IN SUCH MARKET SO THAT THERESULTANT PRICE TO ITS CUSTOMER WAS AS FAVORABLE AS POSSIBLEUNDER PREVAILING MARKET CONDITIONS. THE FIRM SUBMITTEDEVIDENCE THAT IT MADE RESTITUTION TO EACH OF THE AFFECTEDCUSTOMERS.



Resolution:










Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $60,000, COMPRISED OFA $36,000 FINE FOR MSRB RULE G-17 AND G-30 VIOLATIONS, AND A $24,000FINE FOR THE FINRA RULE 2010 AND NASD RULE 2320 VIOLATIONS.


Disclosure 14 of 54

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Allegations: FINRA RULE 2010, NASD RULES 3010(A)(1) AND (B)(1): THE FIRM FAILED TOESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORY SYSTEM ANDWRITTEN PROCEDURES REASONABLY DESIGNED TO ENSURE TIMELYDELIVERY OF MUTUAL FUND PROSPECTUSES CONSISTENT WITHSECTION 5(B)(2) OF THE SECURITIES ACT. DURING THE RELEVANTPERIOD, THE FIRM WAS REQUIRED TO PROVIDE EACH OF ITSCUSTOMERS WHO PURCHASED A MUTUAL FUND A PROSPECTUS FORTHAT FUND NO LATER THAN THREE BUSINESS DAYS AFTER THETRANSACTION. THE FIRM EXECUTED MILLIONS OF MUTUAL FUNDPURCHASE OR EXCHANGE TRANSACTIONS, AND SEVERAL MILLIONS OFTHESE TRANSACTIONS REQUIRED THE FIRM TO DELIVER A MUTUAL FUNDPROSPECTUS, OR A SUMMARY PROSPECTUS, TO THE PURCHASINGCUSTOMER. AS SUCH, DURING THE PERIOD, THE FIRM WAS REQUIRED TOESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TOMONITOR AND ENSURE THE TIMELY DELIVERY OF MUTUAL FUNDPROSPECTUSES. THE FIRM RELIED ON ITS REGISTEREDREPRESENTATIVES FOR THE DELIVERY OF MUTUAL FUNDPROSPECTUSES. EACH REGISTERED REPRESENTATIVE WAS REQUIREDTO OBTAIN THE CUSTOMER'S SIGNATURE ON A PROSPECTUS RECEIPTFORM IN ORDER TO DOCUMENT DELIVERY OF THE PROSPECTUS.HOWEVER, THE FIRM DID NOT HAVE A SUPERVISORY SYSTEM IN PLACEREASONABLY DESIGNED TO ENSURE THAT PROSPECTUS RECEIPTS HADBEEN OBTAINED IN CONNECTION WITH MUTUAL FUND PURCHASES ORTHAT A PROSPECTUS HAD ACTUALLY BEEN DELIVERED TIMELY.SPECIFICALLY, DURING THE PERIOD, THE FIRM'S WRITTEN SUPERVISORYPROCEDURES DID NOT REQUIRE AN ADEQUATE REVIEW OF ITSREGISTERED REPRESENTATIVES' PERFORMANCE OF THEIR PROSPECTUSDELIVERY OBLIGATIONS. INSTEAD, THE FIRM'S PROCEDURES CONSISTEDOF SOME INADEQUATE MEASURES. FOR SOME TIME, THE FIRM WASAWARE THAT ITS PROCEDURES WERE FAILING TO ENSURE THAT ITSREGISTERED REPRESENTATIVES CONSISTENTLY OBTAINED PROSPECTUSRECEIPTS OR OTHER EVIDENCE OF MUTUAL FUND PROSPECTUSDELIVERY. INDEED, ON AT LEAST TWO OCCASIONS SINCE THAT TIME, THEFIRM CONSIDERED PROPOSALS TO MODIFY ITS PROCEDURES FORTRACKING PROSPECTUS DELIVERY COMPLIANCE. NEVERTHELESS,THROUGHOUT THE RELEVANT PERIOD, THE FIRM DID NOT MODIFY ORENHANCE ITS PROCEDURES AND CONTINUED TO RELY UPONREGISTERED REPRESENTATIVES WITHOUT ADEQUATE CONTROLS ORSAFEGUARDS TO ENSURE AND MONITOR MUTUAL FUND PROSPECTUSDELIVERY.







Initiated By: FINRA


Other


N/A





AWARE THAT ITS PROCEDURES WERE FAILING TO ENSURE THAT ITSREGISTERED REPRESENTATIVES CONSISTENTLY OBTAINED PROSPECTUSRECEIPTS OR OTHER EVIDENCE OF MUTUAL FUND PROSPECTUSDELIVERY. INDEED, ON AT LEAST TWO OCCASIONS SINCE THAT TIME, THEFIRM CONSIDERED PROPOSALS TO MODIFY ITS PROCEDURES FORTRACKING PROSPECTUS DELIVERY COMPLIANCE. NEVERTHELESS,THROUGHOUT THE RELEVANT PERIOD, THE FIRM DID NOT MODIFY ORENHANCE ITS PROCEDURES AND CONTINUED TO RELY UPONREGISTERED REPRESENTATIVES WITHOUT ADEQUATE CONTROLS ORSAFEGUARDS TO ENSURE AND MONITOR MUTUAL FUND PROSPECTUSDELIVERY.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $400,000. FINE PAID INFULL ON 1/15/2013.


No










Initiated By: FINRA


Allegations: FINRA RULE 2010, NASD RULES 3010(A)(1) AND (B)(1): THE FIRM FAILED TOESTABLISH AND MAINTAIN AN ADEQUATE SUPERVISORY SYSTEM ANDWRITTEN PROCEDURES REASONABLY DESIGNED TO ENSURE TIMELYDELIVERY OF MUTUAL FUND PROSPECTUSES CONSISTENT WITHSECTION 5(B)(2) OF THE SECURITIES ACT. DURING THE RELEVANTPERIOD, THE FIRM WAS REQUIRED TO PROVIDE EACH OF ITSCUSTOMERS WHO PURCHASED A MUTUAL FUND A PROSPECTUS FORTHAT FUND NO LATER THAN THREE BUSINESS DAYS AFTER THETRANSACTION. THE FIRM EXECUTED MILLIONS OF MUTUAL FUNDPURCHASE OR EXCHANGE TRANSACTIONS, AND SEVERAL MILLIONS OFTHESE TRANSACTIONS REQUIRED THE FIRM TO DELIVER A MUTUAL FUNDPROSPECTUS, OR A SUMMARY PROSPECTUS, TO THE PURCHASINGCUSTOMER. AS SUCH, DURING THE PERIOD, THE FIRM WAS REQUIRED TOESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM AND WRITTENSUPERVISORY PROCEDURES THAT WERE REASONABLY DESIGNED TOMONITOR AND ENSURE THE TIMELY DELIVERY OF MUTUAL FUNDPROSPECTUSES. THE FIRM RELIED ON ITS REGISTEREDREPRESENTATIVES FOR THE DELIVERY OF MUTUAL FUNDPROSPECTUSES. EACH REGISTERED REPRESENTATIVE WAS REQUIREDTO OBTAIN THE CUSTOMER'S SIGNATURE ON A PROSPECTUS RECEIPTFORM IN ORDER TO DOCUMENT DELIVERY OF THE PROSPECTUS.HOWEVER, THE FIRM DID NOT HAVE A SUPERVISORY SYSTEM IN PLACEREASONABLY DESIGNED TO ENSURE THAT PROSPECTUS RECEIPTS HADBEEN OBTAINED IN CONNECTION WITH MUTUAL FUND PURCHASES ORTHAT A PROSPECTUS HAD ACTUALLY BEEN DELIVERED TIMELY.SPECIFICALLY, DURING THE PERIOD, THE FIRM'S WRITTEN SUPERVISORYPROCEDURES DID NOT REQUIRE AN ADEQUATE REVIEW OF ITSREGISTERED REPRESENTATIVES' PERFORMANCE OF THEIR PROSPECTUSDELIVERY OBLIGATIONS. INSTEAD, THE FIRM'S PROCEDURES CONSISTEDOF SOME INADEQUATE MEASURES. FOR SOME TIME, THE FIRM WASAWARE THAT ITS PROCEDURES WERE FAILING TO ENSURE THAT ITSREGISTERED REPRESENTATIVES CONSISTENTLY OBTAINED PROSPECTUSRECEIPTS OR OTHER EVIDENCE OF MUTUAL FUND PROSPECTUSDELIVERY. INDEED, ON AT LEAST TWO OCCASIONS SINCE THAT TIME, THEFIRM CONSIDERED PROPOSALS TO MODIFY ITS PROCEDURES FORTRACKING PROSPECTUS DELIVERY COMPLIANCE. NEVERTHELESS,THROUGHOUT THE RELEVANT PERIOD, THE FIRM DID NOT MODIFY ORENHANCE ITS PROCEDURES AND CONTINUED TO RELY UPONREGISTERED REPRESENTATIVES WITHOUT ADEQUATE CONTROLS ORSAFEGUARDS TO ENSURE AND MONITOR MUTUAL FUND PROSPECTUSDELIVERY.








Other


N/A






Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS,THEREFORE THE FIRM IS CENSURED AND FINED $400,000.



Disclosure 15 of 54

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Initiated By: MONTANA COMMISSIONER OF SECURITIES AND INSURANCE




RESTITUTION


Docket/Case Number: SEC-2012-144



Allegations: THE COMMISSIONER ALLEGES THAT LPL FINANCIAL VIOLATED MONT.CODE ANN. 30-10-201(13)(K) BY FAILING TO REASONABLY SUPERVISE AREGISTERED REPRESENTATIVE.


Resolution: Order59©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.








Resolution:

Other Sanctions Ordered: $20,500.00 RESTITUTION

Sanction Details: WITHOUT ADMITTING OR DENYING ANY OF THE COMMISSIONER'SALLEGATIONS, LPL STIPULATED AND AGREED TO A $10,000.00 FINE;$20,500.00 RESTITUTION; AND REQUIRE THE REPRESENTATIVE TOPROVIDE A DISCLOSURE DOCUMENT TO PROSPECTIVE CLIENTS.

Sanctions Ordered: Monetary/Fine $10,000.00Disgorgement/Restitution

Order

Disclosure 16 of 54

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Other Product Type(s): NON-TRADED REAL ESTATE INVESTMENT TRUST

Allegations: LPL VIOLATED MASSACHUSETTS AND PROSPECTUS REQUIREMENTS INADDITION TO FAILURE TO SUPERVISE AND TRAIN AGENTS IN CONNECTIONWITH THE SALE OF NON-TRADED REITS.



Resolution:

Other Sanctions Ordered: RESTITUTION TO LPL INVESTORS MEETING CONSENT ORDER CRITERIA

Sanction Details: $500,000.00 FINE AND RESTITUTION TO INVESTORS MEETING CONSENTORDER CRITERIA

Sanctions Ordered: CensureMonetary/Fine $500,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order







Sanction Details:ORDER CRITERIA









Other Product Type(s): NON-TRADED REAL ESTATE INVESTMENT TRUST

Allegations: LPL VIOLATED MASSACHUSETTS AND PROSPECTUS REQUIREMENTS INADDITION TO FAILURE TO SUPERVISE AND TRAIN AGENTS IN CONNECTIONWITH THE SALE OF NON-TRADED REITS.



Resolution:

Other Sanctions Ordered: RESTITUTION TO LPL INVESTORS MEETING CONSENT ORDER CRITERIA

Sanction Details: $500,000.00 FINE AND RESTITUTION TO INVESTORS MEETING CONSENTORDER CRITERIA

Sanctions Ordered: CensureMonetary/Fine $500,000.00Disgorgement/RestitutionCease and Desist/Injunction

Order

Disclosure 17 of 54

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Allegations: FINRA RULES 2010, 6730, MSRB RULES G-8, G-14 - LPL FINANCIAL LLCFAILED TO REPORT INFORMATION REGARDING PURCHASE AND SALETRANSACTIONS EFFECTED IN MUNICIPAL SECURITIES TO THE REAL-TIMETRANSACTION REPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBEDBY RULE G-14 RTRS PROCEDURES AND THE RTRS USERS MANUAL. THEFIRM FAILED TO REPORT INFORMATION ABOUT SUCH TRANSACTIONSWITHIN 15 MINUTES OF TRADE TIME TO AN RTRS PORTAL. THE FIRMFAILED TO REPORT THE CORRECT TRADE TIME TO THE RTRS FOR THESETRANSACTIONS. THE FIRM FAILED TO SHOW THE CORRECT EXECUTIONTIME ON THE MEMORANDUM OF BROKERAGE ORDERS. THE FIRM FAILEDTO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBTSECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THISCONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRARULE 6730 AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUTEXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE 2010.








Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE AGENCY DEBT SECURITIES

FIRM FAILED TO REPORT INFORMATION ABOUT SUCH TRANSACTIONSWITHIN 15 MINUTES OF TRADE TIME TO AN RTRS PORTAL. THE FIRMFAILED TO REPORT THE CORRECT TRADE TIME TO THE RTRS FOR THESETRANSACTIONS. THE FIRM FAILED TO SHOW THE CORRECT EXECUTIONTIME ON THE MEMORANDUM OF BROKERAGE ORDERS. THE FIRM FAILEDTO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBTSECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THISCONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRARULE 6730 AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUTEXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE 2010.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $17,500, OF WHICH$12,500 IS FOR MSRB RULE VIOLATIONS. FINE PAID IN FULL ON JULY 24,2012.


No



iReporting Source:








Initiated By: FINRA






Other Product Type(s): TRACE-ELIGIBLE AGENCY DEBT SECURITIES

Allegations: FINRA RULES 2010, 6730, MSRB RULES G-8, G-14 - LPL FINANCIAL LLCFAILED TO REPORT INFORMATION REGARDING PURCHASE AND SALETRANSACTIONS EFFECTED IN MUNICIPAL SECURITIES TO THE REAL-TIMETRANSACTION REPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBEDBY RULE G-14 RTRS PROCEDURES AND THE RTRS USERS MANUAL. THEFIRM FAILED TO REPORT INFORMATION ABOUT SUCH TRANSACTIONSWITHIN 15 MINUTES OF TRADE TIME TO AN RTRS PORTAL. THE FIRMFAILED TO REPORT THE CORRECT TRADE TIME TO THE RTRS FOR THESETRANSACTIONS. THE FIRM FAILED TO SHOW THE CORRECT EXECUTIONTIME ON THE MEMORANDUM OF BROKERAGE ORDERS. THE FIRM FAILEDTO REPORT TO THE TRADE REPORTING AND COMPLIANCE ENGINE(TRACE) S1 TRANSACTIONS IN TRACE-ELIGIBLE AGENCY DEBTSECURITIES WITHIN 15 MINUTES OF THE EXECUTION TIME. THISCONDUCT CONSTITUTES SEPARATE AND DISTINCT VIOLATIONS OF FINRARULE 6730 AND A PATTERN OR PRACTICE OF LATE REPORTING WITHOUTEXCEPTIONAL CIRCUMSTANCES IN VIOLATION OF FINRA RULE 2010.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $17,500, OF WHICH$12,500 IS FOR MSRB RULE VIOLATIONS.



i63©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.






Disclosure 18 of 54


Initiated By: ILLINOIS


Restitution


MONETARY PENALTY OTHER THAN FINES





Other Product Type(s): PROMISSORY NOTE

Allegations: RESPONDENT LPL FINANCIAL,LLC WAS SUBJECT TO SANCTIONS UNDERSECTIONS 8.E(1)(E)(I) AND 8.E(1)(E)(IV) OF THE ILLINOIS SECURITIES LAWOF 1953 BECAUSE IT FAILED TO REASONABLY SUPERVISE ARTHUR LINWHILE HE WAS A REGISTERED REPRESENTATIVE OF THE COMPANY.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT LPLFINANCIAL, LLC CONSENTED TO THE RESOLUTION OF THIS CASE.



Resolution:

Other Sanctions Ordered: RESTITUTION TOTAL AMOUNT: APPROX. $1,885,000.00

DATE PAID BY THE SUBJECT: 10/26/2011

Sanction Details: MONETARY PENALTY OTHER THAN FINES TOTAL AMOUNT: $250,000RESTITUTION TOTAL AMOUNT: APPROX. $1,885,000.00

DATE PAID BY THE SUBJECT: 10/26/2011

Regulator Statement FOR MORE INFORMATION, CONTACT ENFORCEMENT ATTORNEY JAMESGLEFFE AT(312)793-3384


No

Sanctions Ordered: Monetary/Fine $250,000.00

Order







Regulator StatementGLEFFE AT(312)793-3384




Restitution






Other Product Type(s): PROMISSORY NOTE

Allegations: RESPONDENT LPL FINANCIAL LLC WAS SUBJECT TO SANCTIONS UNDERSECTIONS 8.E(1)(E)(I) AND 8.E(1)(E)(IV) OF THE ILLINOIS SECURITIES LAWOF 1953 BECAUSE IT FAILED TO REASONABLY SUPERVISE ARTHUR LINWHILE HE WAS A REGISTERED REPRESENTATIVE OF THE COMPANY.WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT LPLFINANCIAL LLC CONSENTED TO THE RESOLUTION OF THIS CASE.



Resolution:

Other Sanctions Ordered: RESTITUTION TOTAL AMOUNT: APPROX. $1,885,000.00 DATE PAID BY THESUBJECT: 10/26/2011

Sanction Details: MONETARY PENALTY OTHER THAN FINES TOTAL AMOUNT: $250,000RESTITUTION TOTAL AMOUNT: APPROX. $1,885,000.00 DATE PAID BY THESUBJECT: 10/26/2011

Firm Statement FOR MORE INFORMATION, CONTACT ENFORCEMENT ATTORNEY JAMESGLEFFE AT(312)793-3384


Order

Disclosure 19 of 54

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Allegations: LPL FINANCIAL LLC (RESPONDENT) DOES NOT ADMIT OR DENY THEALLEGATIONS OF THE PENNSYLVANIA SECURITIES COMMISSION THAT THERESPONDENT FAILED TO PROPERLY SUPERVISE AT LEAST TWOREGISTERED REPRESENTATIVES IN VIOLATION OF THE PROVISIONS OFTHE PA SECURITIES ACT OF 1972.








Initiated By: PENNSYLVANIA CONTACT: COUNSEL STEFANIE Z. HAMILTON(215)-560-2088




LPL FINANCIAL LLC IS ORDERED TO PAY A $400,000.00 ADMINISTRATIVEASSESSMENT WITHIN 30 DAYS FROM THE DATE OF THIS ORDER.


Docket/Case Number: 2009-10-06






Resolution:


Sanction Details: LPL FINANCIAL LLC IS ORDERED TO PAY A $400,000.00 ADMINISTRATIVEASSESSMENT WITHIN 30 DAYS FROM THE DATE OF THIS ORDER. LPLFINANCIAL LLC IS ORDERED TO PAY $59,092.52 IN INVESTIGATIVE ANDLEGAL COSTS WITHIN 30 DAYS FROM THE DATE OF THIS ORDER.

Regulator Statement FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TO LPLFINANCIAL LLC.


No


Settled










Initiated By: PENNSYLVANIA CONTACT: COUNSEL STEFANIE Z. HAMILTON (215)-560-2088




LPL FINANCIAL LLC IS ORDERED TO PAY A $400,000.00 ADMINISTRATIVEASSESSMENT WITHIN 30 DAYS FROM THE DATE OF THIS ORDER.







Resolution:


Sanction Details: LPL FINANCIAL LLC IS ORDERED TO PAY A $400,000.00 ADMINISTRATIVEASSESSMENT WITHIN 30 DAYS FROM THE DATE OF THIS ORDER. LPLFINANCIAL LLC IS ORDERED TO PAY $59,092.52 IN INVESTIGATIVE ANDLEGAL COSTS WITHIN 30 DAYS FROM THE DATE OF THIS ORDER.

Firm Statement FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TO LPLFINANCIAL LLC.


Settled

Disclosure 20 of 54

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Initiated By: OREGON DIVISION OF FINANCE AND CORPORATE SECURITIES


Docket/Case Number: S-07-0001-2

Allegations: FIRM FAILED TO DILIGENTLY SUPERVISE SECURITIES ACTIVITIES OF OSJBRANCH MANGER; FIRM FAILED TO CONDUCT EFFECTIVE EXAMINATIONOF OSJ OFFICE ON PERIODIC BASIS TO ENSURE COMPLIANCE WITHPOLICIES AND PROCEDURES.










Cease and Desist


CIVIL PENALTY






Resolution:


Sanction Details: FIRM WAS ORDERED TO CEASE AND DESIST FROM VIOLATING OREGONLAW, AND FINED $100,000.00

Regulator Statement OSJ BRANCH MANAGER SOLD GENERAL PARTNERSHIP UNITS TO SENIORCITIZEN CLIENT BASE. FIRM APPROVED UNSUITABLE TRANSACTIONS,AND FAILED TO CONDUCT EFFECTIVE ANNUAL EXAMINATIONS OF BRANCHMANAGER'S PRACTICE.


No


Other


Initiated By: OREGON DIVISION OF FINANCE AND CORPORATE SECURITIES



Allegations: FIRM FAILED TO DILIGENTLY SUPERVISE SECURITIES ACTIVITIES OF OSJBRANCH MANGER; FIRM FAILED TO CONDUCT EFFECTIVE EXAMINATIONOF OSJ OFFICE ON PERIODIC BASIS TO ENSURE COMPLIANCE WITHPOLICIES AND PROCEDURES.















Resolution:


Sanction Details: FIRM WAS ORDERED TO CEASE AND DESIST FROM VIOLATING OREGONLAW, AND FINED $100,000.00

Firm Statement OSJ BRANCH MANAGER SOLD GENERAL PARTNERSHIP UNITS TO SENIORCITIZEN CLIENT BASE. FIRM APPROVED UNSUITABLE TRANSACTIONS, ANDFAILED TO CONDUCT EFFECTIVE ANNUAL EXAMINATIONS OF BRANCHMANAGER'S PRACTICE.


Other

Disclosure 21 of 54

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Initiated By: FINRA



Allegations: FINRA RULES 2010, 6730, NASD RULES 2110, 3010, 6230, 6955(A) - LPLFINANCIAL LLC TRANSMITTED REPORTS TO THE ORDER AUDIT TRAILSYSTEM (OATS) THAT CONTAINED INACCURATE ACCOUNT TYPE CODES.THE FIRM INACCURATELY TRANSMITTED EXECUTION REPORTS ORCOMBINED ORDER/EXECUTION REPORTS TO OATS IT WAS NOT REQUIREDTO SUBMIT. THE FIRM FAILED TO REPORT TO THE TRADE REPORTING ANDCOMPLIANCE ENGINE (TRACE) TRANSACTIONS IN TRACE-ELIGIBLESECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS, AND NASD AND FINRA RULESCONCERNING THE REPORTING OF TRANSACTIONS TO TRACE.











Other Product Type(s): TRACE-ELIGIBLE SECURITIES


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $22,500 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDINGREPORTING OF TRANSACTIONS TO TRACE WITHIN 30 DAYS OFACCEPTANCE OF THIS AWC BY THE NAC.


No




Initiated By: FINRA

Allegations: FINRA RULES 2010, 6730, NASD RULES 2110, 3010, 6230, 6955(A) - LPLFINANCIAL LLC TRANSMITTED REPORTS TO THE ORDER AUDIT TRAILSYSTEM (OATS) THAT CONTAINED INACCURATE ACCOUNT TYPE CODES.THE FIRM INACCURATELY TRANSMITTED EXECUTION REPORTS ORCOMBINED ORDER/EXECUTION REPORTS TO OATS IT WAS NOT REQUIREDTO SUBMIT. THE FIRM FAILED TO REPORT TO THE TRADE REPORTING ANDCOMPLIANCE ENGINE (TRACE) TRANSACTIONS IN TRACE-ELIGIBLESECURITIES WITHIN 15 MINUTES OF THE TIME OF EXECUTION. THE FIRM'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLESECURITIES LAWS, REGULATIONS, AND NASD AND FINRA RULESCONCERNING THE REPORTING OF TRANSACTIONS TO TRACE.







Initiated By: FINRA







Other Product Type(s): TRACE-ELIGIBLE SECURITIES


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED, FINED $22,500 AND REQUIRED TOREVISE ITS WRITTEN SUPERVISORY PROCEDURES REGARDINGREPORTING OF TRANSACTIONS TO TRACE WITHIN 30 DAYS OFACCEPTANCE OF THIS AWC BY THE NAC.



Disclosure 22 of 54

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Allegations: FINRA RULE 2010, NASD RULES 2110, 3010(B): FROM MARCH 2005THROUGH MARCH 2010 TWO OF THE FIRM'S REPRESENTATIVESCONDUCTED LIVE CALL-IN FINANCE AND INVESTMENT RELATED RADIOSHOWS; ALTHOUGH THE FIRM'S PROCEDURES CALLED FOR QUARTERLYREVIEWS, THE FIRM FAILED TO REVIEW THE BROADCASTS. AREPRESENTATIVE OF THE FIRM SUBMITTED A WRITTEN REQUEST TOCONDUCT A LIVE CALL-IN FINANCE AND INVESTMENT RELATED RADIOSHOW TO BE BROADCAST IN FARSI. THE FIRM HAD VARIOUS WRITTENPROCEDURES RELATING TO THE SUPERVISION OF PUBLIC APPEARANCESBY ITS REPRESENTATIVES, WHICH AMONG OTHER THINGS, REQUIREDTHAT THE FIRST THREE RADIO SHOWS BE SUBMITTED TO THE FIRM'SADVERTISING COMPLIANCE DEPARTMENT AS SOON AS THEY HAD AIRED;THE PROCEDURES ALSO PROVIDED THAT THE ADVERTISING COMPLIANCEDEPARTMENT WOULD CONTACT REPRESENTATIVES QUARTERLY TOREQUEST COPIES OF SPECIFIC SHOWS DURING A RANDOMLY CHOSENDATE RANGE FOR REVIEW. THE FIRM APPROVED THE REPRESENTATIVE'SREQUEST. THE FIRM'S APPROVAL SPECIFIED "PER OUR CONVERSATIONYOU WILL PROVIDE A TRANSLATED COPY OF YOUR SHOW UPON OURQUARTERLY REQUEST; THE TRANSLATION WILL BE COMPLETED BY ANUNAFFILIATED 3RD PARTY TRANSLATION COMPANY." THEREPRESENTATIVE TOGETHER WITH ANOTHER REPRESENTATIVE OF THEFIRM AIRED APPROXIMATELY 520 SHOWS ON A PARTICULAR RADIOSTATION; THE FORMAT WAS TYPICALLY A LIVE CALL-IN SHOW, IN FARSI,DISCUSSING FINANCIAL ISSUES AND INVESTMENTS. THE FIRM FAILED TOREQUEST OR REVIEW COPIES OR TRANSCRIPTS OF THE BROADCASTS.








Initiated By: FINRA


Other


N/A





THE PROCEDURES ALSO PROVIDED THAT THE ADVERTISING COMPLIANCEDEPARTMENT WOULD CONTACT REPRESENTATIVES QUARTERLY TOREQUEST COPIES OF SPECIFIC SHOWS DURING A RANDOMLY CHOSENDATE RANGE FOR REVIEW. THE FIRM APPROVED THE REPRESENTATIVE'SREQUEST. THE FIRM'S APPROVAL SPECIFIED "PER OUR CONVERSATIONYOU WILL PROVIDE A TRANSLATED COPY OF YOUR SHOW UPON OURQUARTERLY REQUEST; THE TRANSLATION WILL BE COMPLETED BY ANUNAFFILIATED 3RD PARTY TRANSLATION COMPANY." THEREPRESENTATIVE TOGETHER WITH ANOTHER REPRESENTATIVE OF THEFIRM AIRED APPROXIMATELY 520 SHOWS ON A PARTICULAR RADIOSTATION; THE FORMAT WAS TYPICALLY A LIVE CALL-IN SHOW, IN FARSI,DISCUSSING FINANCIAL ISSUES AND INVESTMENTS. THE FIRM FAILED TOREQUEST OR REVIEW COPIES OR TRANSCRIPTS OF THE BROADCASTS.


Resolution:




No



iReporting Source:








Initiated By: FINRA


Other


N/A





Allegations: FINRA RULE 2010, NASD RULES 2110, 3010(B): FROM MARCH 2005THROUGH MARCH 2010 TWO OF THE FIRM'S REPRESENTATIVESCONDUCTED LIVE CALL-IN FINANCE AND INVESTMENT RELATED RADIOSHOWS; ALTHOUGH THE FIRM'S PROCEDURES CALLED FOR QUARTERLYREVIEWS, THE FIRM FAILED TO REVIEW THE BROADCASTS. AREPRESENTATIVE OF THE FIRM SUBMITTED A WRITTEN REQUEST TOCONDUCT A LIVE CALL-IN FINANCE AND INVESTMENT RELATED RADIOSHOW TO BE BROADCAST IN FARSI. THE FIRM HAD VARIOUS WRITTENPROCEDURES RELATING TO THE SUPERVISION OF PUBLIC APPEARANCESBY ITS REPRESENTATIVES, WHICH AMONG OTHER THINGS, REQUIREDTHAT THE FIRST THREE RADIO SHOWS BE SUBMITTED TO THE FIRM'SADVERTISING COMPLIANCE DEPARTMENT AS SOON AS THEY HAD AIRED;THE PROCEDURES ALSO PROVIDED THAT THE ADVERTISING COMPLIANCEDEPARTMENT WOULD CONTACT REPRESENTATIVES QUARTERLY TOREQUEST COPIES OF SPECIFIC SHOWS DURING A RANDOMLY CHOSENDATE RANGE FOR REVIEW. THE FIRM APPROVED THE REPRESENTATIVE'SREQUEST. THE FIRM'S APPROVAL SPECIFIED "PER OUR CONVERSATIONYOU WILL PROVIDE A TRANSLATED COPY OF YOUR SHOW UPON OURQUARTERLY REQUEST; THE TRANSLATION WILL BE COMPLETED BY ANUNAFFILIATED 3RD PARTY TRANSLATION COMPANY." THEREPRESENTATIVE TOGETHER WITH ANOTHER REPRESENTATIVE OF THEFIRM AIRED APPROXIMATELY 520 SHOWS ON A PARTICULAR RADIOSTATION; THE FORMAT WAS TYPICALLY A LIVE CALL-IN SHOW, IN FARSI,DISCUSSING FINANCIAL ISSUES AND INVESTMENTS. THE FIRM FAILED TOREQUEST OR REVIEW COPIES OR TRANSCRIPTS OF THE BROADCASTS.



Resolution:












Disclosure 23 of 54

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Initiated By: FINRA





Allegations: FINRA RULE 2010, NASD RULES 2110, 3010: THE FIRM'S SUPERVISORYSYSTEM AND WRITTEN SUPERVISORY PROCEDURES REQUIRED THATDESIGNATED PRINCIPALS AND OFFICE OF SUPERVISORY JURISDICTION(OSJ) MANAGERS PERFORM A DAILY REVIEW OF THE ELECTRONICBUSINESS COMMUNICATIONS OF ALL LICENSED AND/OR REGISTEREDPERSONNEL UNDER THEIR SUPERVISION. TO HELP THEM PERFORM THISFUNCTION, THE FIRM UTILIZED AN AUTOMATED SUPERVISORY SYSTEM,THE OSJ REVIEW TOOL (ORT), WHICH SELECTED FOR REVIEW FIVEPERCENT OF EACH DAY'S INCOMING AND OUTGOING ELECTRONICCOMMUNICATIONS UTILIZING KEY WORDS AND RANDOM SELECTION.SUPERVISORS WERE REQUIRED TO REVIEW ALL OF THE E-MAILSSELECTED BY THE ORT. THE FIRM FAILED TO ENFORCE ITS SUPERVISORYSYSTEM AND WRITTEN SUPERVISORY PROCEDURES RELATING TO THEREVIEW OF ELECTRONIC COMMUNICATIONS IN CERTAIN BRANCHLOCATIONS AS FOLLOWS: 1. APPROXIMATELY THREE MILLION E-MAILSTRANSMITTED AND RECEIVED BY 150 FIRM FINANCIAL ADVISORS FROM769 BANK BRANCH LOCATIONS RELATED TO ONE BANK PROGRAM WERENOT PROCESSED THROUGH THE ORT DUE TO A TECHNOLOGY PROBLEMCONCERNING THE INTERFACE BETWEEN ONE BANK PROGRAM'S E-MAILSYSTEM AND THE FIRM'S ORT. THEREFORE, THOSE E-MAILS WERE NOTSUBJECT TO SUPERVISORY REVIEW BY FIRM MANAGERS ANDPRINCIPALS; AND 2. THE FIRM'S ORT FLAGGED FOR SUPERVISORYREVIEW APPROXIMATELY 1,794 E-MAILS TRANSMITTED AND RECEIVED BYFINANCIAL ADVISORS IN A BRANCH OFFICE. NEVERTHELESS, THOSEE-MAILS WERE NEVER REVIEWED BY A BRANCH MANAGER OR PRINCIPAL.









Other


N/A



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE IT IS CENSURED AND FINED $100,000.


No




Allegations: FINRA RULE 2010, NASD RULES 2110, 3010: THE FIRM'S SUPERVISORYSYSTEM AND WRITTEN SUPERVISORY PROCEDURES REQUIRED THATDESIGNATED PRINCIPALS AND OFFICE OF SUPERVISORY JURISDICTION(OSJ) MANAGERS PERFORM A DAILY REVIEW OF THE ELECTRONICBUSINESS COMMUNICATIONS OF ALL LICENSED AND/OR REGISTEREDPERSONNEL UNDER THEIR SUPERVISION. TO HELP THEM PERFORM THISFUNCTION, THE FIRM UTILIZED AN AUTOMATED SUPERVISORY SYSTEM,THE OSJ REVIEW TOOL (ORT), WHICH SELECTED FOR REVIEW FIVEPERCENT OF EACH DAY'S INCOMING AND OUTGOING ELECTRONICCOMMUNICATIONS UTILIZING KEY WORDS AND RANDOM SELECTION.SUPERVISORS WERE REQUIRED TO REVIEW ALL OF THE E-MAILSSELECTED BY THE ORT. THE FIRM FAILED TO ENFORCE ITS SUPERVISORYSYSTEM AND WRITTEN SUPERVISORY PROCEDURES RELATING TO THEREVIEW OF ELECTRONIC COMMUNICATIONS IN CERTAIN BRANCHLOCATIONS AS FOLLOWS: 1. APPROXIMATELY THREE MILLION E-MAILSTRANSMITTED AND RECEIVED BY 150 FIRM FINANCIAL ADVISORS FROM769 BANK BRANCH LOCATIONS RELATED TO ONE BANK PROGRAM WERENOT PROCESSED THROUGH THE ORT DUE TO A TECHNOLOGY PROBLEMCONCERNING THE INTERFACE BETWEEN ONE BANK PROGRAM'S E-MAILSYSTEM AND THE FIRM'S ORT. THEREFORE, THOSE E-MAILS WERE NOTSUBJECT TO SUPERVISORY REVIEW BY FIRM MANAGERS ANDPRINCIPALS; AND 2. THE FIRM'S ORT FLAGGED FOR SUPERVISORYREVIEW APPROXIMATELY 1,794 E-MAILS TRANSMITTED AND RECEIVED BYFINANCIAL ADVISORS IN A BRANCH OFFICE. NEVERTHELESS, THOSEE-MAILS WERE NEVER REVIEWED BY A BRANCH MANAGER OR PRINCIPAL.







Initiated By: FINRA


Other


N/A





NOT PROCESSED THROUGH THE ORT DUE TO A TECHNOLOGY PROBLEMCONCERNING THE INTERFACE BETWEEN ONE BANK PROGRAM'S E-MAILSYSTEM AND THE FIRM'S ORT. THEREFORE, THOSE E-MAILS WERE NOTSUBJECT TO SUPERVISORY REVIEW BY FIRM MANAGERS ANDPRINCIPALS; AND 2. THE FIRM'S ORT FLAGGED FOR SUPERVISORYREVIEW APPROXIMATELY 1,794 E-MAILS TRANSMITTED AND RECEIVED BYFINANCIAL ADVISORS IN A BRANCH OFFICE. NEVERTHELESS, THOSEE-MAILS WERE NEVER REVIEWED BY A BRANCH MANAGER OR PRINCIPAL.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE IT IS CENSURED AND FINED $100,000.



Disclosure 24 of 54

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Allegations: NASD RULES 2110, 3010(A), 3012(A)(2)(B)(I): THE FIRM FAILED TOESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM,INCLUDING WRITTEN SUPERVISORY PROCEDURES, THAT WEREREASONABLY DESIGNED TO REVIEW AND MONITOR ALL TRANSMITTALSOF FUNDS AND SECURITIES FROM THE ACCOUNTS OF CUSTOMERS TOTHIRD PARTY ACCOUNTS AND TO ACCOUNTS OF REGISTEREDREPRESENTATIVES. THE FIRM'S SUPERVISORY CONTROL PROCEDURESFOR THIRD-PARTY TRANSMITTALS INCLUDE THE USE OF AN "OSJ REVIEWTOOL" ("ORT") TO MONITOR THIRD-PARTY DISBURSEMENTS. HOWEVER,ORT WAS DESIGNED TO IDENTIFY ONLY TRANSMITTALS OF CASH, E.G. INTHE FORM OF CHECKS, AUTOMATED CLEARING HOUSE (ACH)TRANSACTIONS, OR WIRE TRANSFERS TO THIRD PARTIES. THUS, THEFIRM'S CONTROL PROCEDURES FOR REVIEW OF THIRD-PARTYTRANSMITTALS USING ORT ONLY ADDRESS THE REVIEW OF THIRD-PARTYCASH TRANSMITTALS IN THE FORM OF CHECKS, ACH TRANSACTIONS, ORWIRE TRANSFERS. THE FIRM'S CONTROL PROCEDURES FOR REVIEWUSING ORT DID NOT ADDRESS JOURNALS BETWEEN ACCOUNTS. AREGISTERED REPRESENTATIVE OF THE FIRM EXPLOITED THIS FAILUREAND JOURNALED $40,000 IN CASH AS WELL AS SECURITIES OUT OFCUSTOMERS' ACCOUNTS TO HIS PERSONAL ACCOUNT AND CONVERTEDTHE CASH AND PROCEEDS FROM THE SALE OF THE JOURNALEDSECURITIES IN THE AGGREGATE AMOUNT OF OVER $1.0 MILLION.ADDITIONALLY, THE FIRM'S PROCEDURES FURTHER REQUIRED THAT ANYJOURNAL THAT RESULTS IN ASSETS BEING JOURNALED INTO AREGISTERED REPRESENTATIVE'S PERSONAL ACCOUNT MUST BESUBMITTED TO A SUPERVISOR FOR APPROVAL. THE FIRM FAILED TODOCUMENT ANY APPROVALS OF THE SUBJECT JOURNALS OR DOCUMENTTHAT THE REQUESTS WERE ESCALATED TO A SUPERVISOR FOR FURTHERREVIEW. FURTHERMORE, WHILE THE FIRM'S PROCEDURES REQUIRETHAT THE FIRM SEND A WRITTEN CONFIRMATION TO THE CUSTOMER'SADDRESS OF RECORD IN CONJUNCTION WITH ALL THIRD PARTYJOURNALS, THE FIRM FAILED TO SEND WRITTEN CONFIRMATIONS INCONJUNCTION WITH SEVEN THIRD PARTY JOURNALS.








Initiated By: FINRA


Other


N/A





FOR THIRD-PARTY TRANSMITTALS INCLUDE THE USE OF AN "OSJ REVIEWTOOL" ("ORT") TO MONITOR THIRD-PARTY DISBURSEMENTS. HOWEVER,ORT WAS DESIGNED TO IDENTIFY ONLY TRANSMITTALS OF CASH, E.G. INTHE FORM OF CHECKS, AUTOMATED CLEARING HOUSE (ACH)TRANSACTIONS, OR WIRE TRANSFERS TO THIRD PARTIES. THUS, THEFIRM'S CONTROL PROCEDURES FOR REVIEW OF THIRD-PARTYTRANSMITTALS USING ORT ONLY ADDRESS THE REVIEW OF THIRD-PARTYCASH TRANSMITTALS IN THE FORM OF CHECKS, ACH TRANSACTIONS, ORWIRE TRANSFERS. THE FIRM'S CONTROL PROCEDURES FOR REVIEWUSING ORT DID NOT ADDRESS JOURNALS BETWEEN ACCOUNTS. AREGISTERED REPRESENTATIVE OF THE FIRM EXPLOITED THIS FAILUREAND JOURNALED $40,000 IN CASH AS WELL AS SECURITIES OUT OFCUSTOMERS' ACCOUNTS TO HIS PERSONAL ACCOUNT AND CONVERTEDTHE CASH AND PROCEEDS FROM THE SALE OF THE JOURNALEDSECURITIES IN THE AGGREGATE AMOUNT OF OVER $1.0 MILLION.ADDITIONALLY, THE FIRM'S PROCEDURES FURTHER REQUIRED THAT ANYJOURNAL THAT RESULTS IN ASSETS BEING JOURNALED INTO AREGISTERED REPRESENTATIVE'S PERSONAL ACCOUNT MUST BESUBMITTED TO A SUPERVISOR FOR APPROVAL. THE FIRM FAILED TODOCUMENT ANY APPROVALS OF THE SUBJECT JOURNALS OR DOCUMENTTHAT THE REQUESTS WERE ESCALATED TO A SUPERVISOR FOR FURTHERREVIEW. FURTHERMORE, WHILE THE FIRM'S PROCEDURES REQUIRETHAT THE FIRM SEND A WRITTEN CONFIRMATION TO THE CUSTOMER'SADDRESS OF RECORD IN CONJUNCTION WITH ALL THIRD PARTYJOURNALS, THE FIRM FAILED TO SEND WRITTEN CONFIRMATIONS INCONJUNCTION WITH SEVEN THIRD PARTY JOURNALS.


Resolution:


No











No



Allegations: NASD RULES 2110, 3010(A), 3012(A)(2)(B)(I): THE FIRM FAILED TOESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM,INCLUDING WRITTEN SUPERVISORY PROCEDURES, THAT WEREREASONABLY DESIGNED TO REVIEW AND MONITOR ALL TRANSMITTALSOF FUNDS AND SECURITIES FROM THE ACCOUNTS OF CUSTOMERS TOTHIRD PARTY ACCOUNTS AND TO ACCOUNTS OF REGISTEREDREPRESENTATIVES. THE FIRM'S SUPERVISORY CONTROL PROCEDURESFOR THIRD-PARTY TRANSMITTALS INCLUDE THE USE OF AN "OSJ REVIEWTOOL" ("ORT") TO MONITOR THIRD-PARTY DISBURSEMENTS. HOWEVER,ORT WAS DESIGNED TO IDENTIFY ONLY TRANSMITTALS OF CASH, E.G. INTHE FORM OF CHECKS, AUTOMATED CLEARING HOUSE (ACH)TRANSACTIONS, OR WIRE TRANSFERS TO THIRD PARTIES. THUS, THEFIRM'S CONTROL PROCEDURES FOR REVIEW OF THIRD-PARTYTRANSMITTALS USING ORT ONLY ADDRESS THE REVIEW OF THIRD-PARTYCASH TRANSMITTALS IN THE FORM OF CHECKS, ACH TRANSACTIONS, ORWIRE TRANSFERS. THE FIRM'S CONTROL PROCEDURES FOR REVIEWUSING ORT DID NOT ADDRESS JOURNALS BETWEEN ACCOUNTS. AREGISTERED REPRESENTATIVE OF THE FIRM EXPLOITED THIS FAILUREAND JOURNALED $40,000 IN CASH AS WELL AS SECURITIES OUT OFCUSTOMERS' ACCOUNTS OF HIS PERSONAL ACCOUNT AND CONVERTEDTHE CASH AND PROCEEDS FROM THE SALE OF THE JOURNALEDSECURITIES IN THE AGGREGATE AMOUNT OF OVER $1.0 MILLION.ADDITIONALLY, THE FIRM'S PROCEDURES FURTHER REQUIRED THAT ANYJOURNAL THAT RESULTS IN ASSETS BEING JOURNALED INTO AREGISTERED REPRESENTATIVE'S PERSONAL ACCOUNT MUST BESUBMITTED TO A SUPERVISOR FOR APPROVAL. THE FIRM FAILED TODOCUMENT ANY APPROVALS OF THE SUBJECT JOURNALS OR DOCUMENTTHAT THE REQUESTS WERE ESCALATED TO A SUPERVISOR FOR FURTHERREVIEW. FURTHERMORE, WHILE THE FIRM'S PROCEDURES REQUIRETHAT THE FIRM SEND A WRITTEN CONFIRMATION TO THE CUSTOMER'SADDRESS OF RECORD IN CONJUNCTION WITH ALL THIRD PARTYJOURNALS, THE FIRM FAILED TO SEND WRITTEN CONFIRMATIONS INCONJUNCTION WITH SEVEN THIRD PARTY JOURNALS.







Initiated By: FINRA


Other


N/A





THAT THE REQUESTS WERE ESCALATED TO A SUPERVISOR FOR FURTHERREVIEW. FURTHERMORE, WHILE THE FIRM'S PROCEDURES REQUIRETHAT THE FIRM SEND A WRITTEN CONFIRMATION TO THE CUSTOMER'SADDRESS OF RECORD IN CONJUNCTION WITH ALL THIRD PARTYJOURNALS, THE FIRM FAILED TO SEND WRITTEN CONFIRMATIONS INCONJUNCTION WITH SEVEN THIRD PARTY JOURNALS.


Resolution:





Disclosure 25 of 54

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Initiated By: FINRA



Allegations: NASD RULES 2110, 2320 - LPL FINANCIAL CORPORATION, INTRANSACTIONS FOR OR WITH A CUSTOMER, FAILED TO USE REASONABLEDILIGENCE TO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILEDTO BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO ITSCUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDER PREVAILINGMARKET CONDITIONS.















Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $20,000.


No




Initiated By: FINRA





Allegations: NASD RULES 2110, 2320 - LPL FINANCIAL CORPORATION, INTRANSACTIONS FOR OR WITH A CUSTOMER, FAILED TO USE REASONABLEDILIGENCE TO ASCERTAIN THE BEST INTER-DEALER MARKET AND FAILEDTO BUY OR SELL IN SUCH MARKET SO THAT THE RESULTANT PRICE TO ITSCUSTOMER WAS AS FAVORABLE AS POSSIBLE UNDER PREVAILINGMARKET CONDITIONS.













Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $20,000.



Disclosure 26 of 54

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Allegations: FINRA RULE 2010, NASD RULES 2110, 3010: ON DECEMBER 4, 2006, THEFIRM ENTERED INTO AN AWC RELATING TO ITS FAILURE TO REASONABLYSUPERVISE ITS VARIABLE ANNUITY EXCHANGE BUSINESS. THE FIRM HADINADEQUATE AUTOMATED SYSTEMS AND WRITTEN PROCEDURES FORVARIABLE ANNUITY EXCHANGES REPORTED ON THE ELECTRONICBRANCH TRADE REPORT SYSTEM ("EBTR"). AT THE TIME THE FIRMENTERED INTO THE AWC, THE FIRM WAS IN THE PROCESS OF UPGRADINGITS CENTRALIZED ONLINE ORDER-ENTRY SYSTEM TO SWITCH FROM THEEBTR TO THE ANNUITY ORDER ENTRY SYSTEM (AOE) SYSTEM IN ORDERTO ENHANCE THE FIRM'S OVERALL REVIEW OF VARIABLE ANNUITYEXCHANGE TRANSACTIONS. ACCORDINGLY, AS PART OF THE AWC, FINRAREQUIRED THAT THE FIRM RETAIN AN INDEPENDENT CONSULTANT TOREVIEW AND MAKE RECOMMENDATIONS REGARDING THE AOE SYSTEMAND THE FIRM'S PROCEDURES TO REASONABLY ENSURE THAT THE FIRMWAS IN COMPLIANCE WITH FEDERAL SECURITIES LAWS AND NASD RULESRELATING TO THE EXCHANGE OF VARIABLE ANNUITIES. IN MAY 2008, THEFIRM ATTESTED TO FINRA THAT IT HAD IMPLEMENTED THE ROLLOUT OFTHE NEW AOE SYSTEM. WHEN THE ROLLOUT WAS COMPLETED, THE FIRMAMENDED ITS WRITTEN SUPERVISORY PROCEDURES TO MAKE THE USEOF THE AOE SYSTEM MANDATORY, WITH MINOR EXCEPTIONS, FOR ALLREGISTERED REPRESENTATIVES WHO ENGAGED IN VARIABLE ANNUITYEXCHANGE TRANSACTIONS AS OF OCTOBER 15, 2008. DESPITE THEROLLOUT OF THE AOE SYSTEM AND THE FIRM'S ATTESTATION TO FINRA,THE FIRM FAILED TO ENFORCE THE MANDATORY USAGE OF THE AOESYSTEM UNTIL OCTOBER 2009. AS A RESULT, DURING THE PERIOD OFOCTOBER 2008 UNTIL OCTOBER 2009, THE FIRM REGISTEREDREPRESENTATIVES ENTERED ORDERS FOR APPROXIMATELY 15% OF THEFIRM'S VARIABLE ANNUITY EXCHANGE TRANSACTIONS USING THE EBTRSYSTEM INSTEAD OF THE AOE SYSTEM. THEREFORE, BY FAILING TOENFORCE THE MANDATORY USE OF THE AOE SYSTEM FROM OCTOBER2008 UNTIL OCTOBER 2009, THE FIRM FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE ANNUITYEXCHANGE TRANSACTIONS.







Initiated By: FINRA


Other


N/A





ROLLOUT OF THE AOE SYSTEM AND THE FIRM'S ATTESTATION TO FINRA,THE FIRM FAILED TO ENFORCE THE MANDATORY USAGE OF THE AOESYSTEM UNTIL OCTOBER 2009. AS A RESULT, DURING THE PERIOD OFOCTOBER 2008 UNTIL OCTOBER 2009, THE FIRM REGISTEREDREPRESENTATIVES ENTERED ORDERS FOR APPROXIMATELY 15% OF THEFIRM'S VARIABLE ANNUITY EXCHANGE TRANSACTIONS USING THE EBTRSYSTEM INSTEAD OF THE AOE SYSTEM. THEREFORE, BY FAILING TOENFORCE THE MANDATORY USE OF THE AOE SYSTEM FROM OCTOBER2008 UNTIL OCTOBER 2009, THE FIRM FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE ANNUITYEXCHANGE TRANSACTIONS.


Resolution:




No










Initiated By: FINRA


Other






Allegations: FINRA RULE 2010, NASD RULES 2110, 3010: ON DECEMBER 4, 2006, THEFIRM ENTERED INTO AN AWC RELATING TO ITS FAILURE TO REASONABLYSUPERVISE ITS VARIABLE ANNUITY EXCHANGE BUSINESS. THE FIRM HADINADEQUATE AUTOMATED SYSTEMS AND WRITTEN PROCEDURES FORVARIABLE ANNUITY EXCHANGES REPORTED ON THE ELECTRONICBRANCH TRADE REPORT SYSTEM ("EBTR"). AT THE TIME THE FIRMENTERED INTO THE AWC, THE FIRM WAS IN THE PROCESS OF UPGRADINGITS CENTRALIZED ONLINE ORDER-ENTRY SYSTEM TO SWITCH FROM THEEBTR TO THE ANNUITY ORDER ENTRY SYSTEM (AOE) SYSTEM IN ORDERTO ENHANCE THE FIRM'S OVERALL REVIEW OF VARIABLE ANNUITYEXCHANGE TRANSACTIONS. ACCORDINGLY, AS PART OF THE AWC, FINRAREQUIRED THAT THE FIRM RETAIN AN INDEPENDENT CONSULTANT TOREVIEW AND MAKE RECOMMENDATIONS REGARDING THE AOE SYSTEMAND THE FIRM'S PROCEDURES TO REASONABLY ENSURE THAT THE FIRMWAS IN COMPLIANCE WITH FEDERAL SECURITIES LAWS AND NASD RULESRELATING TO THE EXCHANGE OF VARIABLE ANNUITIES. IN MAY 2008, THEFIRM ATTESTED TO FINRA THAT IT HAD IMPLEMENTED THE ROLLOUT OFTHE NEW AOE SYSTEM. WHEN THE ROLLOUT WAS COMPLETED, THE FIRMAMENDED ITS WRITTEN SUPERVISORY PROCEDURES TO MAKE THE USEOF THE AOE SYSTEM MANDATORY, WITH MINOR EXCEPTIONS, FOR ALLREGISTERED REPRESENTATIVES WHO ENGAGED IN VARIABLE ANNUITYEXCHANGE TRANSACTIONS AS OF OCTOBER 15, 2008. DESPITE THEROLLOUT OF THE AOE SYSTEM AND THE FIRM'S ATTESTATION TO FINRA,THE FIRM FAILED TO ENFORCE THE MANDATORY USAGE OF THE AOESYSTEM UNTIL OCTOBER 2009. AS A RESULT, DURING THE PERIOD OFOCTOBER 2008 UNTIL OCTOBER 2009, THE FIRM'S REGISTEREDREPRESENTATIVES ENTERED ORDERS FOR APPROXIMATELY 15% OF THEFIRM'S VARIABLE ANNUITY EXCHANGE TRANSACTIONS USING THE EBTRSYSTEM INSTEAD OF THE AOE SYSTEM. THEREFORE, BY FAILING TOENFORCE THE MANDATORY USE OF THE AOE SYSTEM FROM OCTOBER2008 UNTIL OCTOBER 2009, THE FIRM FAILED TO ENFORCE ITS WRITTENSUPERVISORY PROCEDURES RELATING TO VARIABLE ANNUITYEXCHANGE TRANSACTIONS










Resolution:





Disclosure 27 of 54

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Other


CONSENT






Allegations: THE ENFORCEMENT SECTION OF THE MISSOURI SECURITIES DIVISIONHAS ALLEGED THAT RESPONDENT LPL CORP. FAILED TO REASONABLYSUPERVISE A MISSOURI-REGISTERED AGENT.



Resolution:


No

Consent








Sanction Details: RESPONDENT'S REGISTRATION IS HEREBY CENSURED. RESPONDENT ISORDERED TO PAY THE SUM OF $25,000. RESPONDENT IS ORDERED TOPAY $10,000 IN RESTITUTION AND INTEREST. RESPONDENT IS ORDEREDTO PAY $2,540 AS RESPONDENT'S SHARE OF THE COST OF THISINVESTIGATION. RESPONDENT SHALL PAY ITS OWN COSTS ANDATTORNEYS FEES WITH RESPECT TO THIS MATTER.


No





Other


CONSENT





Allegations: MATTER INVOLVED SALE OF VARIABLE ANNUITY CONTRACT IN APRIL 2000IN WHICH LPL REPRESENTATIVE ALLEGEDLY MISUNDERSTOOD HOW THELIVING BENEFIT INCOME RIDER WOULD OPERATE DURING A DECLININGMARKET. ORDER ALSO NOTED THAT, SINCE THE TRANSACTION IN APRIL2000, LPL HAS MADE NUMEROUS CHANGES TO ITS TRAINING ANDSUPERVISION OF VARIABLE ANNUITY TRANSACTIONS.



Resolution:


Consent








Sanction Details: RESPONDENT'S REGISTRATION IS HEREBY CENSURED. RESPONDENT ISORDERED TO PAY THE SUM OF $25,000. RESPONDENT IS ORDERED TOPAY $10,000 IN RESTITUTION AND INTEREST. RESPONDENT IS ORDEREDTO PAY $2,540 AS RESPONDENT'S SHARE OF THE COST OF THISINVESTIGATION. RESPONDENT SHALL PAY ITS OWN COSTS ANDATTORNEYS FEES WITH RESPECT TO THIS MATTER.

Firm Statement ALL TERMS OF THE ORDER HAVE BEEN COMPLIED WITH AND PAYMENT INFULL FORWARDED ON AUGUST 4, 2010. MATTER HAS BEEN CONCLUDE


Disclosure 28 of 54

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Restitution







Other Product Type(s): OIL & GAS

Allegations: RESPONDENT LPL FINANCIAL CORPORATION WAS SUBJECT TOSANCTIONS UNDER SECTIONS 8.E(1)(E)(I) AND 8.E(1)(E)(IV) OF THEILLINOIS SECURITIES LAW OF 1953 BECAUSE IT FAILED TO REASONABLYSUPERVISE STEPHEN WALKER WHILE HE WAS A REGISTEREDREPRESENTATIVE OF THE COMPANY. WITHOUT ADMITTING OR DENYINGTHE ALLEGATIONS, RESPONDENT LPL FINANCIAL CONSENTED TO THERESOLUTION OF THIS CASE.



Resolution:









Other Sanctions Ordered: MONETARY/FINE 300,000.00

Sanction Details: 300,000.00 MUST BE PAID BY 7/22/10

Regulator Statement FOR MORE INFORMATION, CONTACT ENFORCEMENT ATTORNEYBERNADETTE COLE OR ENFORCEMENT ATTORNEY JAMES GLEFFE AT(312) 793-3384.





Restitution






Other Product Type(s): OIL AND GAS

Allegations: MATTER AROSE OUT OF FORMER REPRESENTATIVE STEPHEN WALKER'SALLEGED ROLE IN THE SALE OF PARTICIPATIONS IN OIL AND GASDRILLING PROJECTS BETWEEN OCTOBER 2005 AND DECEMBER 2006.THE INVESTMENTS HAD NOT BEEN PRESENTED TO OR APPROVED BY LPLFOR SALE TO CUSTOMERS AND LPL WAS NOT AWARE OF WALKER'SACTIVITIES. THE ORDER ALLEGED THAT LPL HAD SEVERALOPPORTUNITIES TO DETECT WALKER'S ACTIVITIES DURING THIS PERIOD.



Resolution:

Other Sanctions Ordered: RESTITUTION $167,796.18

Sanction Details: THE FINE AND THE RESTITUTION WERE BOTH PAID ON JULY 20, 2010.

Firm Statement THE MATTER HAS BEEN CONCLUDED.









Disclosure 29 of 54

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Initiated By: KENTUCKY DIVISION OF SECURITIES





Docket/Case Number: 2010-AH-012




Allegations: THE FIRM PAID ADVERTISING COMPENSATION TO AN AGENT WHO WASNOT QUALIFIED AND WAS NOT REGISTERED AS AN INVESTMENT ADVISORREPRESENTATIVE.



Resolution:


Sanction Details: $4,000 FINE WAS PAID ON MAY 5, 2010.


No


Order


Allegations: THE FIRM PAID ADVISORY COMPENSATION TO AN AGENT WHO WAS NOTQUALIFIED AND WAS NOT REGISTERED AS AN INVESTMENT ADVISORREPRESENTATIVE.








Initiated By: KENTUCKY DIVISION OF SECURITIES





Docket/Case Number: 2010-AH-012



REPRESENTATIVE.


Resolution:


Sanction Details: $4000 FINE WAS PAID ON MARCH 5, 2010.

Firm Statement LPL HAS REVIEWED THE MATTER AND THE AGENT WAS NOT PROPERLYREGISTERED TO RECEIVE ADVISORY COMPENSATION IN KENTUCKY, BUTHAD BEEN PERMITTED TO DO SO AS A RESULT OF A BOOKKEEPING ORCODING ERROR.


Order

Disclosure 30 of 54

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Initiated By: MONTANA OFFICE OF THE STATE AUDITOR, COMMISSIONER OFSECURITIES AND INSURANCE


Docket/Case Number: CASE NO. SEC-2009-46



Allegations: THE MONTANA SECURITIES DEPARTMENT ALLEGED THAT LPL VIOLATEDMONT. CODE ANN. § 30-10-201(13)(K) BY FAILING TO REASONABLYSUPERVISE A REGISTERED REPRESENTATIVE TO ENSURE THEREGISTERED REPRESENTATIVES COMPLIANCE WITH THE MONTANASECURITIES ACT.














Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE SINGLE CHARGE OF FAILURE TOSUPERVISE, LPL FINANCIAL CORPORATION AGREED TO PAY RESTITUTIONOF $1,144,416.51 AND A FINE TO THE STATE OF MONTANA OF $150,000.THE FINE WAS PAID ON OCTOBER 29, 2009 AND THE RESTITUTION WASPAID ON NOVEMBER 19, 2009.

Firm Statement ON OCTOBER 26, 2009, THE STATE OF MONTANA AND LPL FINANCIALCORPORATION ENTERED INTO A CONSENT AGREEMENT. ALSO ONOCTOBER 26, 2009, THE MONTANA DEPUTY COMMISSIONER OFSECURITIES EXECUTED A FINAL ORDER, ADOPTING THE CONSENTAGREEMENT. THE FINAL ORDER TERMINATED THIS MATTER.


Consent

Disclosure 31 of 54

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Initiated By: FINRA



Allegations: MSRB RULE G-14 - LPL FINANCIAL CORPORATION FAILED TO REPORTINFORMATION REGARDING PURCHASE AND SALE TRANSACTIONSEFFECTED IN MUNICIPAL SECURITIES TO THE REAL-TIME TRANSACTIONREPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBED BY RULE G-14RTRS PROCEDURES AND THE RTRS USERS MANUAL. THE FIRM FAILED TOREPORT INFORMATION ABOUT TRANSACTIONS WITHIN 15 MINUTES OFTHE TIME OF TRADE TO AN RTRS PORTAL AND FAILED TO REPORTINFORMATION ABOUT TRANSACTIONS INVOLVING AUCTION RATEPRODUCTS BY THE END OF THE RTRS BUSINESS DAY ON WHICH THETRANSACTIONS WERE EXECUTED.













Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS FINED $5,000.


No




Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.




Allegations: MSRB RULE G-14 - LPL FINANCIAL CORPORATION FAILED TO REPORTINFORMATION REGARDING PURCHASE AND SALE TRANSACTIONSEFFECTED IN MUNICIPAL SECURITIES TO THE REAL-TIME TRANSACTIONREPORTING SYSTEM (RTRS) IN THE MANNER PRESCRIBED BY RULE G-14RTRS PROCEDURES AND THE RTRS USERS MANUAL. THE FIRM FAILED TOREPORT INFORMATION ABOUT TRANSACTIONS WITHIN 15 MINUTES OFTHE TIME OF TRADE TO AN RTRS PORTAL AND FAILED TO REPORTINFORMATION ABOUT TRANSACTIONS INVOLVING AUCTION RATEPRODUCTS BY THE END OF THE RTRS BUSINESS DAY ON WHICH THETRANSACTIONS WERE EXECUTED.













Resolution:





Disclosure 32 of 54

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Initiated By: HAWAII





Docket/Case Number: SEU-2007-73




Allegations: FAILURE TO DISCLOSE TO CLIENTS MATERIAL INFORMATION INCONNECTION WITH THE OFFER, SALE, OR PURCHASE OF SECURITIES BYOMITTING TO INFORM CLIENTS THAT THE SECURITIES PRODUCTS WEREOFFERED THROUGH LPL AND WERE NOT BANK PRODUCTS ANDTHEREFORE NOT FDIC INSURED. THIS ACTIVITY TOOK PLACE AT CENTRALPACIFIC INVESTMENT SERVICES BRANCH OFFICE IN KAHULUI, MAUI.


Resolution: Consent








Resolution:


Sanction Details: AN ADMINISTRATIVE PENALTY OF $10,000.00 WAS ASSESSED AND PAID.

Regulator Statement ENTERED INTO A CONSENT AGREEMENT WITH LPL, CENTRAL PACIFICBANK DBA CENTRAL PACIFIC INVESTMENT SERVICES, AND JASON SCOTTWILLIAMS. AN ADMINISTRATIVE PENALTY OF $10,000.00 WAS ASSESSEDAND PAID.


No



Initiated By: HAWAII





Docket/Case Number: SEU-2007-73



Allegations: FAILURE TO DISCLOSE TO CLIENTS MATERIAL INFORMATION INCONNECTION WITH THE OFFER, SALE, OR PURCHASE OF SECURITIES BYOMITTING TO INFORM CLIENTS THAT THE SECURITIES PRODUCTS WEREOFFERED THROUGH LPL AND WERE NOT BANK PRODUCTS ANDTHEREFORE NOT FDIC INSURED. THIS ACTIVITY TOOK PLACE AT CENTRALPACIFIC INVESTMENT SERVICES BRANCH OFFICE IN KAHULUI, MAUI.



Resolution:


Consent








Sanction Details: AN ADMINISTRATIVE PENALTY OF $10,000.00 WAS ASSESSED AND PAID.

Firm Statement ENTERED INTO A CONSENT AGREEMENT WITH LPL, CENTRAL PACIFICBANK DBA CENTRAL PACIFIC INVESTMENT SERVICES, AND FINANCIALADVISOR. AN ADMINISTRATIVE PENALTY OF $10,000.00 WAS ASSESSEDAND PAID.


Disclosure 33 of 54

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Initiated By: TEXAS


Reprimand


ADMINISTRATIVE FINE


Docket/Case Number: IC08-CAF-22




Allegations: ON OR ABOUT JULY 25,1983, LPL FINANCIAL CORPORATION REGISTEREDWITH THE SECURITIES COMMISSIONER AS A DEALER. SOMETIMEBETWEEN FEBRUARY 2005 AND DECEMBER 26, 2005, AN AGENT OF LPLFINANCIAL CORPORATION NOTIFIED THE FIRM OF A FELONY CHARGETHAT OCCURED ON OR ABOUT DECEMBER 18, 2004. ON OR ABOUT MARCH3, 2006, A FORM U-4 DISCLOSING THE FELONY CHARGE WAS FILED WITHTHE SECURITIES COMMISSIONER ON BEHALF OF ITS AGENT. AT THE TIMEOF THE FELONY CHARGE, LPL'S WRITTEN PROCEDURES PROVIDED THAT"LPL FINANCIAL ADVISORS AND OTHER ASSOCIATED PERSONS MUSTIMMEDIATELY NOTIFY THEIR OSJ BRANCH MANAGER AND LPL'S LEGALDEPARTMENT IF THEY ARE EVER CHARGED WITH OR CONVICTED OF ANYFELONY..THE FORM U4 OF REGISTERED PERSONNEL WILL BE PROMPTLYUPDATED TO REFLECT SUCH CHARGES, CONVICTIONS.." LPL FINANCIALCORPORATION FAILED TO ENFORCE ITS WRITTEN PROCEDURESRELATING TO THE NOTIFICATION OF A FELONY CHARGE AND FORM U-4UPDATE.









Resolution:

Other Sanctions Ordered: REPRIMAND/UNDERTAKING

Sanction Details: NO OTHER SANCTIONS FOLLOW.


No


Order


Initiated By: TEXAS


Reprimand





Allegations: ON OR ABOUT JULY 25, 1983, LPL FINANCIAL CORPORATION REGISTEREDWITH THE SECURITIES COMMISSIONER AS A DEALER. SOMETIMEBETWEEN FEBRUARY 2005 AND DECEMBER 26, 2005, AN AGENT OF LPLFINANCIAL CORPORATION NOTIFIED THE FIRM OF A FELONY CHARGETHAT OCCURED ON OR ABOUT DECEMBER 18, 2004. ON OR ABOUTMARCH 3, 2006, A FORM U-4 DISCLOSING THE FELONY CHARGE WAS FILEDWITH THE SECURITIES COMMISSIONER ON BEHALF OF ITS AGENT. AT THETIME OF THE FELONY CHARGE, LPL'S WRITTEN PROCEDURES PROVIDEDTHAT "LPL FINANCIAL ADVISORS AND OTHER ASSOCIATED PERSONSMUST IMMEDIATELY NOTIFY THEIR OSJ BRANCH MANAGER AND LPL'SLEGAL DEPARTMENT IF THEY ARE EVER CHARGED WITH OR CONVICTEDOF ANY FELONY.. THE FORM U4 OF REGIESTERED PERSONNEL WILL BEPROMPTLY UPDATED TO REFLECT SUCH CHARGES, CONVICTIONS.." LPLFINANCIAL CORPORATION FAILED TO ENFORCE ITS WRITTENPROCEDURES RELATING TO THE NOTIFICATION OF A FELONY CHARGEAND FORM U-4 UPDATE.









ADMINISTRATIVE FINE


Resolution:

Other Sanctions Ordered: REPRIMAND/UNDERTAKING

Sanction Details: NO OTHER SANCTIONS FOLLOW.


Other

Disclosure 34 of 54

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Allegations: SEC ADMINISTRATIVE PROCEEDING RELEASE NOS. 58515 AND 2775,SEPTEMBER 11, 2008: THE SEC DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF1940 AGAINST LPL FINANCIAL CORPORATION, FORMERLY KNOWN ASLINSCO/PRIVATE LEDGER CORP. ("LPL"). IN ANTICIPATION OF THEINSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED ANOFFER OF SETTLEMENT ("OFFER") WHICH THE SEC HAS DETERMINED TOACCEPT. THESE PROCEEDINGS ARISE OUT OF THE VIOLATIONS BY LPL, AREGISTERED BROKER-DEALER, INVESTMENT ADVISER, AND TRANSFERAGENT, OF THE SAFEGUARDS RULE OF REGULATION S-P (17 CFR SEC.248.30(A)) (THE "SAFEGUARDS RULE"), WHICH REQUIRESBROKER-DEALERS AND SEC-REGISTERED INVESTMENT ADVISERS TOADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNEDTO PROTECT CUSTOMER INFORMATION. DESPITE ITS BEING AWARE ASEARLY AS 2006 THAT IT HAD INSUFFICIENT SECURITY CONTROLS TOSAFEGUARD CUSTOMER INFORMATION AT ITS BRANCH OFFICES, LPLFAILED TO IMPLEMENT ADEQUATE CONTROLS, INCLUDING SOMESECURITY MEASURES, WHICH LEFT CUSTOMER INFORMATION AT LPL'SBRANCH OFFICES VULNERABLE TO UNAUTHORIZED ACCESS. BETWEENMID-JULY 2007 AND FEBRUARY 2008, LPL EXPERIENCED A SERIES OFCOMPUTER SYSTEM SECURITY BREACHES IN WHICH AN UNAUTHORIZEDPERSON(S) ACCESSED AND TRADED, OR ATTEMPTED TO TRADE, IN THECUSTOMER ACCOUNTS OF SEVERAL OF LPL'S REGISTEREDREPRESENTATIVES. AS OF THE DATE OF THE "HACKING" INCIDENTS, LPLHAD FAILED TO IMPLEMENT INCREASED SECURITY MEASURES ANDADOPT POLICIES AND PROCEDURES REASONABLY DESIGNED TOSAFEGUARD CUSTOMER INFORMATION AS REQUIRED BY REGULATIONS-P. LPL DETECTED THE BREACHES AND ABSORBED THE LOSSES IN THECUSTOMER ACCOUNTS. NONETHELESS, LPL'S FAILURES LEFT CUSTOMERINFORMATION VULNERABLE TO IDENTITY THIEVES OR OTHERUNAUTHORIZED USERS AT THE FIRM'S BRANCH OFFICES.







Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Cease and Desist


CENSURE, A CIVIL MONEY PENALTY, AND UNDERTAKINGS.





SAFEGUARD CUSTOMER INFORMATION AS REQUIRED BY REGULATIONS-P. LPL DETECTED THE BREACHES AND ABSORBED THE LOSSES IN THECUSTOMER ACCOUNTS. NONETHELESS, LPL'S FAILURES LEFT CUSTOMERINFORMATION VULNERABLE TO IDENTITY THIEVES OR OTHERUNAUTHORIZED USERS AT THE FIRM'S BRANCH OFFICES.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS - A. DEVISE AND IMPLEMENT, WITHIN 30 DAYS AFTER THEISSUANCE OF THIS ORDER, A POLICY AND A SET OF PROCEDURES FORTRAINING ITS EMPLOYEES AND ALL REGISTERED REPRESENTATIVESREGARDING SAFEGUARDING CUSTOMER RECORDS AND INFORMATION.B. RETAIN, WITHIN TEN (10) DAYS OF THE DATE OF ENTRY OF THIS ORDER,THE SERVICES OF AN INDEPENDENT CONSULTANT. LPL SHALLEXCLUSIVELY BEAR ALL COSTS OF THE INDEPENDENT CONSULTANT. LPLSHALL RETAIN THE INDEPENDENT CONSULTANT TO: (I) REVIEW LPL'SWRITTEN POLICIES AND PROCEDURES RELATING TO THE SAFEGUARDSRULE OF REGULATION S-P; AND (II) MAKE RECOMMENDATIONSCONCERNING THESE POLICIES AND PROCEDURES WITH A VIEW TOASSURING COMPLIANCE WITH THE SAFEGUARDS RULE OF REGULATIONS-P. C.NO LATER THAN TEN (10) DAYS FOLLOWING THE DATE OF THEINDEPENDENT CONSULTANT'S ENGAGEMENT, PROVIDE TO THECOMMISSION STAFF A COPY OF AN ENGAGEMENT LETTER DETAILING THEINDEPENDENT CONSULTANT'S RESPONSIBILITIES PURSUANT TOPARAGRAPH B ABOVE. D. ARRANGE FOR THE INDEPENDENT CONSULTANTTO ISSUE ITS REPORT WITHIN 90 DAYS AFTER THE DATE OF THEENGAGEMENT. WITHIN TEN (10) DAYS AFTER THE ISSUANCE OF THEREPORT, LPL SHALL REQUIRE THE INDEPENDENT CONSULTANT TOSUBMIT A COPY OF THE INDEPENDENT CONSULTANT'S REPORT. THEINDEPENDENT CONSULTANT'S REPORT SHALL DESCRIBE THE REVIEWPERFORMED AND THE CONCLUSIONS REACHED AND SHALL INCLUDE ANYRECOMMENDATIONS DEEMED NECESSARY FOR CHANGES IN ORIMPROVEMENTS TO LPL'S WRITTEN POLICIES AND PROCEDURES AND APROCEDURE FOR IMPLEMENTING THE RECOMMENDED CHANGES ORIMPROVEMENTS. E. WITHIN 30 DAYS OF RECEIPT OF THE INDEPENDENTCONSULTANT'S REPORT, ADOPT ALL RECOMMENDATIONS CONTAINED INTHE REPORT AND REMEDY ANY DEFICIENCIES IN ITS WRITTEN POLICIESAND PROCEDURES; PROVIDED, HOWEVER, THAT AS TO ANYRECOMMENDATION THAT LPL BELIEVES IS UNNECESSARY ORINAPPROPRIATE, LPL MAY, WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THEREPORT, ADVISE THE INDEPENDENT CONSULTANT AND THECOMMISSION'S STAFF IN WRITING OF ANY RECOMMENDATIONS[CONTINUE TO ITEM #14]


No

Sanctions Ordered: CensureMonetary/Fine $275,000.00Cease and Desist/Injunction

Order







INDEPENDENT CONSULTANT'S ENGAGEMENT, PROVIDE TO THECOMMISSION STAFF A COPY OF AN ENGAGEMENT LETTER DETAILING THEINDEPENDENT CONSULTANT'S RESPONSIBILITIES PURSUANT TOPARAGRAPH B ABOVE. D. ARRANGE FOR THE INDEPENDENT CONSULTANTTO ISSUE ITS REPORT WITHIN 90 DAYS AFTER THE DATE OF THEENGAGEMENT. WITHIN TEN (10) DAYS AFTER THE ISSUANCE OF THEREPORT, LPL SHALL REQUIRE THE INDEPENDENT CONSULTANT TOSUBMIT A COPY OF THE INDEPENDENT CONSULTANT'S REPORT. THEINDEPENDENT CONSULTANT'S REPORT SHALL DESCRIBE THE REVIEWPERFORMED AND THE CONCLUSIONS REACHED AND SHALL INCLUDE ANYRECOMMENDATIONS DEEMED NECESSARY FOR CHANGES IN ORIMPROVEMENTS TO LPL'S WRITTEN POLICIES AND PROCEDURES AND APROCEDURE FOR IMPLEMENTING THE RECOMMENDED CHANGES ORIMPROVEMENTS. E. WITHIN 30 DAYS OF RECEIPT OF THE INDEPENDENTCONSULTANT'S REPORT, ADOPT ALL RECOMMENDATIONS CONTAINED INTHE REPORT AND REMEDY ANY DEFICIENCIES IN ITS WRITTEN POLICIESAND PROCEDURES; PROVIDED, HOWEVER, THAT AS TO ANYRECOMMENDATION THAT LPL BELIEVES IS UNNECESSARY ORINAPPROPRIATE, LPL MAY, WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THEREPORT, ADVISE THE INDEPENDENT CONSULTANT AND THECOMMISSION'S STAFF IN WRITING OF ANY RECOMMENDATIONS[CONTINUE TO ITEM #14]

Sanction Details: SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHERPROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TOWHICH THE COMMISSION IS A PARTY, AND WITHOUT ADMITTING ORDENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'SJURISDICTION OVER IT AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENTS TO THEENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTIONS 15(B) AND21C OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTIONS 203(E)AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND ACEASE-AND-DESIST ORDER AS TO LPL FINANCIAL CORPORATION("ORDER"). ACCORDINGLY, PURSUANT TO SECTIONS 15(B) AND 21C OFTHE EXCHANGE ACT AND SECTIONS 203(E) AND 203(K) OF THE ADVISERSACT, IT IS HEREBY ORDERED THAT: A. RESPONDENT LPL SHALL CEASEAND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P (17 C.F.R. SEC.248.30(A)). B. RESPONDENT LPL IS CENSURED. C. IT IS FURTHERORDERED THAT RESPONDENT LPL SHALL, WITHIN TEN (10) DAYS OF THEENTRY OF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$275,000.00 TO THE UNITED STATES TREASURY. IF TIMELY PAYMENT ISNOT MADE, ADDITIONAL INTEREST SHALL ACCRUE PURSUANT TO 31U.S.C. 3717. D. RESPONDENT SHALL COMPLY WITH ABOVEUNDERTAKINGS.






UNDERTAKINGS.

Regulator Statement THAT IT CONSIDERS TO BE UNNECESSARY OR INAPPROPRIATE. WITHRESPECT TO ANY RECOMMENDATION THAT LPL CONSIDERSUNNECESSARY OR INAPPROPRIATE, LPL SHALL PROPOSE IN WRITING ANALTERNATIVE POLICY OR PROCEDURE DESIGNED TO ACHIEVE THE SAMEOBJECTIVE OR PURPOSE. F. WITH RESPECT TO ANY RECOMMENDATIONWITH WHICH LPL AND THE INDEPENDENT CONSULTANT DO NOT AGREE,ATTEMPT IN GOOD FAITH TO REACH AN AGREEMENT WITH THEINDEPENDENT CONSULTANT WITHIN 30 DAYS OF RECEIPT OF THEREPORT. IN THE EVENT THAT LPL AND THE INDEPENDENT CONSULTANTARE UNABLE TO AGREE ON AN ALTERNATIVE PROPOSAL ACCEPTABLE TOTHE SEC, LPL WILL ABIDE BY THE ORIGINAL RECOMMENDATION OF THEINDEPENDENT CONSULTANT. G. WITHIN 180 DAYS OF THE ENTRY OF THISORDER, SUBMIT AN AFFIDAVIT TO THE SEC STATING THAT IT HASIMPLEMENTED ANY AND ALL RECOMMENDATIONS OF THE INDEPENDENTCONSULTANT, OR EXPLAINING THE CIRCUMSTANCES UNDER WHICH ITHAS NOT IMPLEMENTED SUCH RECOMMENDATIONS. H. COOPERATEFULLY WITH THE INDEPENDENT CONSULTANT AND PROVIDE THEINDEPENDENT CONSULTANT WITH ACCESS TO ITS FILES, BOOKS,RECORDS AND PERSONNEL AS REASONABLY REQUESTED FOR THEINDEPENDENT CONSULTANT'S REVIEW. I. LPL SHALL REQUIRE THEINDEPENDENT CONSULTANT TO ENTER INTO AN AGREEMENT THATPROVIDES THAT FOR THE PERIOD OF ENGAGEMENT AND FOR A PERIODOF TWO YEARS FROM COMPLETION OF THE ENGAGEMENT, THEINDEPENDENT CONSULTANT SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH LPL, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THEINDEPENDENT CONSULTANT WILL REQUIRE THAT ANY FIRM WITH WHICHHE IS AFFILIATED OR OF WHICH HE IS A MEMBER, AND ANY PERSONENGAGED TO ASSIST THE INDEPENDENT CONSULTANT IN PERFORMANCEOF HIS DUTIES UNDER THIS ORDER SHALL NOT, WITHOUT PRIORWRITTEN CONSENT OF THE SEC, EMPLOYMENT, CONSULTANT,ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONAL RELATIONSHIPWITH LPL.


Allegations: SEC ADMINISTRATIVE PROCEEDING RELEASE NOS. 58515 AND 2775,SEPTEMBER 11, 2008: THE SEC DEEMS IT APPROPRIATE AND IN THEPUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESISTPROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF1940 AGAINST LPL FINANCIAL CORPORATION, FORMERLY KNOWN ASLINSCO/PRIVATE LEDGER CORP. ("LPL"). IN ANTICIPATION OF THEINSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED ANOFFER OF SETTLEMENT ("OFFER") WHICH THE SEC HAS DETERMINED TOACCEPT. THESE PROCEEDINGS ARISE OUT OF THE VIOLATIONS BY LPL, AREGISTERED BROKER-DEALER, INVESTMENT ADVISER, AND TRANSFERAGENT, OF THE SAFEGUARDS RULE OF REGULATION S-P (17 CFR SEC.248.30(A)) (THE "SAFEGUARDS RULE"), WHICH REQUIRESBROKER-DEALERS AND SEC-REGISTERED INVESTMENT ADVISERS TOADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNEDTO PROTECT CUSTOMER INFORMATION.









Cease and Desist


CENSURE, A CIVIL MONEY PENALTY, AND UNDERTAKINGS





PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TOSECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF1940 AGAINST LPL FINANCIAL CORPORATION, FORMERLY KNOWN ASLINSCO/PRIVATE LEDGER CORP. ("LPL"). IN ANTICIPATION OF THEINSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED ANOFFER OF SETTLEMENT ("OFFER") WHICH THE SEC HAS DETERMINED TOACCEPT. THESE PROCEEDINGS ARISE OUT OF THE VIOLATIONS BY LPL, AREGISTERED BROKER-DEALER, INVESTMENT ADVISER, AND TRANSFERAGENT, OF THE SAFEGUARDS RULE OF REGULATION S-P (17 CFR SEC.248.30(A)) (THE "SAFEGUARDS RULE"), WHICH REQUIRESBROKER-DEALERS AND SEC-REGISTERED INVESTMENT ADVISERS TOADOPT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNEDTO PROTECT CUSTOMER INFORMATION.


Resolution:

Other Sanctions Ordered: UNDERTAKINGS - A. DEVISE AND IMPLEMENT, WITHIN 30 DAYS AFTER THEISSUANCE OF THIS ORDER, A POLICY AND A SET OF PROCEDURES FORTRAINING ITS EMPLOYEES AND ALL REGISTERED REPRESENTATIVESREGARDING SAFEGUARDING CUSTOMER RECORDS AND INFORMATION. B.RETAIN, WITHIN TEN (10) DAYS OF THE DATE OF ENTRY OF THIS ORDER,THE SERVICES OF AN INDEPENDENT CONSULTANT. LPL SHALLEXCLUSIVELY BEAR ALL COSTS OF THE INDEPENDENT CONSULTANT. LPLSHALL RETAIN THE INDEPENDENT CONSULTANT TO: (I) REVIEW LPL'SWRITTEN POLICIES AND PROCEDURES RELATING TO THE SAFEGUARDSRULE OF REGULATION S-P; AND (II) MAKE RECOMMENDATIONSCONCERNING THESE POLICIES AND PROCEDURES WITH A VIEW TOASSURING COMPLIANCE WITH THE SAFEGUARDS RULE OF REGULATIONS-P. C. NO LATER THAN TEN (10) DAYS FOLLOWING THE DATE OF THEINDEPENDENT CONSULTANT'S ENGAGEMENT, PROVIDE TO THECOMMISSION STAFF A COPY OF AN ENGAGEMENT LETTER DETAILING THEINDEPENDENT CONSULTANT'S RESPONSIBILITIES PURSUANT TOPARAGRAPH B ABOVE. D. ARRANGE FOR THE INDEPENDENT CONSULTANTTO ISSUE ITS REPORT WITHIN 90 DAYS AFTER THE DATE OF THEENGAGEMENT. WITHIN TEN (10) DAYS AFTER THE ISSUANCE OF THEREPORT, LPL SHALL REQUIRE THE INDEPENDENT CONSULTANT TOSUBMIT A COPY OF THE INDEPENDENT CONSULTANT'S REPORT. THEINDEPENDENT CONSULTANT'S REPORT SHALL DESCRIBE THE REVIEWPERFORMED AND THE CONCLUSIONS REACHED AND SHALL INCLUDE ANYRECOMMENDATIONS DEEMED NECESSARY FOR CHANGES IN ORIMPROVEMENTS TO LPL'S WRITTEN POLICIES AND PROCEDURES AND APROCEDURE FOR IMPLEMENTING THE RECOMMENDED CHANGES ORIMPROVEMENTS. E. WITHIN 30 DAYS OF RECEIPT OF THE INDEPENDENTCONSULTANT'S REPORT, ADOPT ALL RECOMMENDATIONS CONTAINED INTHE REPORT AND REMEDY ANY DEFICIENCIES IN ITS WRITTEN POLICIESAND PROCEDURES; PROVIDED, HOWEVER, THAT AS TO ANYRECOMMENDATION THAT LPL BELIEVES IS UNNECESSARY ORINAPPROPRIATE, LPL MAY, WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THEREPORT, ADVISE THE INDEPENDENT CONSULTANT AND THECOMMISSION'S STAFF IN WRITING OF ANY RECOMMENDATIONS[CONTINUE TO ITEM #13]

Sanctions Ordered: CensureMonetary/Fine $275,000.00Cease and Desist/Injunction

Order







ASSURING COMPLIANCE WITH THE SAFEGUARDS RULE OF REGULATIONS-P. C. NO LATER THAN TEN (10) DAYS FOLLOWING THE DATE OF THEINDEPENDENT CONSULTANT'S ENGAGEMENT, PROVIDE TO THECOMMISSION STAFF A COPY OF AN ENGAGEMENT LETTER DETAILING THEINDEPENDENT CONSULTANT'S RESPONSIBILITIES PURSUANT TOPARAGRAPH B ABOVE. D. ARRANGE FOR THE INDEPENDENT CONSULTANTTO ISSUE ITS REPORT WITHIN 90 DAYS AFTER THE DATE OF THEENGAGEMENT. WITHIN TEN (10) DAYS AFTER THE ISSUANCE OF THEREPORT, LPL SHALL REQUIRE THE INDEPENDENT CONSULTANT TOSUBMIT A COPY OF THE INDEPENDENT CONSULTANT'S REPORT. THEINDEPENDENT CONSULTANT'S REPORT SHALL DESCRIBE THE REVIEWPERFORMED AND THE CONCLUSIONS REACHED AND SHALL INCLUDE ANYRECOMMENDATIONS DEEMED NECESSARY FOR CHANGES IN ORIMPROVEMENTS TO LPL'S WRITTEN POLICIES AND PROCEDURES AND APROCEDURE FOR IMPLEMENTING THE RECOMMENDED CHANGES ORIMPROVEMENTS. E. WITHIN 30 DAYS OF RECEIPT OF THE INDEPENDENTCONSULTANT'S REPORT, ADOPT ALL RECOMMENDATIONS CONTAINED INTHE REPORT AND REMEDY ANY DEFICIENCIES IN ITS WRITTEN POLICIESAND PROCEDURES; PROVIDED, HOWEVER, THAT AS TO ANYRECOMMENDATION THAT LPL BELIEVES IS UNNECESSARY ORINAPPROPRIATE, LPL MAY, WITHIN FIFTEEN (15) DAYS OF RECEIPT OF THEREPORT, ADVISE THE INDEPENDENT CONSULTANT AND THECOMMISSION'S STAFF IN WRITING OF ANY RECOMMENDATIONS[CONTINUE TO ITEM #13]

Sanction Details: SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHERPROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TOWHICH THE COMMISSION IS A PARTY, AND WITHOUT ADMITTING ORDENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'SJURISDICTION OVER IT AND THE SUBJECT MATTER OF THESEPROCEEDINGS, WHICH ARE ADMITTED, RESPONDENT CONSENTS TO THEENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTIONS 15(B) AND21C OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTIONS 203(E)AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKINGFINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND ACEASE-AND-DESIST ORDER AS TO LPL FINANCIAL CORPORATION("ORDER"). ACCORDINGLY, PURSUANT TO SECTIONS 15(B) AND 21C OFTHE EXCHANGE ACT AND SECTIONS 203(E) AND 203(K) OF THE ADVISERSACT, IT IS HEREBY ORDERED THAT: A. RESPONDENT LPL SHALL CEASEAND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANYFUTURE VIOLATIONS OF RULE 30(A) OF REGULATION S-P (17 C.F.R. SEC.248.30(A)). B. RESPONDENT LPL IS CENSURED. C. IT IS FURTHERORDERED THAT RESPONDENT LPL SHALL, WITHIN TEN (10) DAYS OF THEENTRY OF THIS ORDER, PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$275,000.00 TO THE UNITED STATES TREASURY. IF TIMELY PAYMENT ISNOT MADE, ADDITIONAL INTEREST SHALL ACCRUE PURSUANT TO 31U.S.C. 3717. D. RESPONDENT SHALL COMPLY WITH ABOVEUNDERTAKINGS.






NOT MADE, ADDITIONAL INTEREST SHALL ACCRUE PURSUANT TO 31U.S.C. 3717. D. RESPONDENT SHALL COMPLY WITH ABOVEUNDERTAKINGS.

Firm Statement THAT IT CONSIDERS TO BE UNNECESSARY OR INAPPROPRIATE. WITHRESPECT TO ANY RECOMMENDATION THAT LPL CONSIDERSUNNECESSARY OR INAPPROPRIATE, LPL SHALL PROPOSE IN WRITING ANALTERNATIVE POLICY OR PROCEDURE DESIGNED TO ACHIEVE THE SAMEOBJECTIVE OR PURPOSE. F. WITH RESPECT TO ANY RECOMMENDATIONWITH WHICH LPL AND THE INDEPENDENT CONSULTANT DO NOT AGREE,ATTEMPT IN GOOD FAITH TO REACH AN AGREEMENT WITH THEINDEPENDENT CONSULTANT WITHIN 30 DAYS OF RECEIPT OF THEREPORT. IN THE EVENT THAT LPL AND THE INDEPENDENT CONSULTANTARE UNABLE TO AGREE ON AN ALTERNATIVE PROPOSAL ACCEPTABLE TOTHE SEC, LPL WILL ABIDE BY THE ORIGINAL RECOMMENDATION OF THEINDEPENDENT CONSULTANT. G. WITHIN 180 DAYS OF THE ENTRY OF THISORDER, SUBMIT AN AFFIDAVIT TO THE SEC STATING THAT IT HASIMPLEMENTED ANY AND ALL RECOMMENDATIONS OF THE INDEPENDENTCONSULTANT, OR EXPLAINING THE CIRCUMSTANCES UNDER WHICH ITHAS NOT IMPLEMENTED SUCH RECOMMENDATIONS. H. COOPERATEFULLY WITH THE INDEPENDENT CONSULTANT AND PROVIDE THEINDEPENDENT CONSULTANT WITH ACCESS TO ITS FILES, BOOKS,RECORDS AND PERSONNEL AS REASONABLY REQUESTED FOR THEINDEPENDENT CONSULTANT'S REVIEW. I. LPL SHALL REQUIRE THEINDEPENDENT CONSULTANT TO ENTER INTO AN AGREEMENT THATPROVIDES THAT FOR THE PERIOD OF ENGAGEMENT AND FOR A PERIODOF TWO YEARS FROM COMPLETION OF THE ENGAGEMENT, THEINDEPENDENT CONSULTANT SHALL NOT ENTER INTO ANY EMPLOYMENT,CONSULTANT, ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONALRELATIONSHIP WITH LPL, OR ANY OF ITS PRESENT OR FORMERAFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS ACTING INTHEIR CAPACITY. THE AGREEMENT WILL ALSO PROVIDE THAT THEINDEPENDENT CONSULTANT WILL REQUIRE THAT ANY FIRM WITH WHICHHE IS AFFILIATED OR OF WHICH HE IS A MEMBER, AND ANY PERSONENGAGED TO ASSIST THE INDEPENDENT CONSULTANT IN PERFORMANCEOF HIS DUTIES UNDER THIS ORDER SHALL NOT, WITHOUT PRIORWRITTEN CONSENT OF THE SEC, EMPLOYMENT, CONSULTANT,ATTORNEY-CLIENT, AUDITING OR OTHER PROFESSIONAL RELATIONSHIPWITH LPL.

Disclosure 35 of 54

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Allegations: NASD RULES 2110 AND 3010 - RESPONDENT MEMBER FAILED TOREASONABLY SUPERVISE A REGISTERED REPRESENTATIVE INCONNECTION WITH HIS USE OF STRATEGIES, HIS USE OF MARKETINGMATERIALS AND THE APPROPRIATENESS OF THE INVESTMENTS HERECOMMENDED TO PUBLIC CUSTOMERS.







Initiated By: FINRA




Docket/Case Number: E062004027401


Other Product Type(s): UNIT INVESTMENT TRUSTS, EQUITIES



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, LPL FINANCIALCORPORATION, CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINED$125,000, OF WHICH $25,000 IS JOINT AND SEVERAL WITH A REGISTEREDREPRESENTATIVE.


No










http://disciplinaryactions.finra.org/Search.aspx?CaseNB=E062004027401


Initiated By: FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)






Other Product Type(s): UNIT INVESTMENT TRUSTS, EQUITIES

MATERIALS AND THE APPROPRIATENESS OF THE INVESTMENTS HERECOMMENDED TO PUBLIC CUSTOMERS.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, LPL FINANCIALCORPORATION, CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE, THE FIRM IS CENSURED AND FINED$125,000, OF WHICH $25,000 IS JOINT AND SEVERAL WITH A REGISTEREDREPRESENTATIVE.



Disclosure 36 of 54

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Initiated By: PENNSYLVANIA CONTACT: PAUL E. VON GEIS, JR. (717)-783-5177






Allegations: LINSCO/PRIVATE LEDGER CORP., AT CERTAIN TIMES BETWEEN 1998 AND2006, FAILED TO MAINTAIN OR ENFORCE PROCEDURES REASONABLYDESIGNED TO SUPERVISE ONE OR MORE OF ITS AGENTS IN PA.










Other


LINSCO/PRIVATE LEDGER CORP. IS ORDERED TO PAY A $200,000.00ADMINISTRATIVE ASSESSMENT AND $30,000.00 INVESTIGATIVE AND LEGALCOSTS.



Resolution:


Sanction Details: LINSCO/PRIVATE LEDGER CORP. IS ORDERED TO PAY A $200,000.00ADMINISTRATIVE ASSESSMENT AND $30,000.00 INVESTIGATIVE AND LEGALCOSTS.

Regulator Statement FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER ISSUED TOLINSCO/PRIVATE LEDGER CORP.


Settled


Initiated By: PENNSYLVANIA


Other


LINSCO / PRIVATE LEDGER CORP. IS ORDERED TO PAY A $200,000ADMINISTRATIVE ASSESSMENT AND A $30,000 INVESTIGATIVE AND LEGALCOST.





Allegations: LINSCO / PRIVATE LEDGER CORP., AT CERTAIN TIMES BETWEEN 1998 AND2006, FAILED TO MAINTAIN OR ENFORCE PROCEDURES REASONABLYDESIGNED TO SUPERVISE ONE OR MORE OF IT'S AGENTS IN PA.



Resolution:


Settled








Sanction Details: LINSCO / PRIVATE LEDGER CORP. IS ORDERED TO PAY A $200,000.00ADMINISTRATIVE ASSESSMENT AND $30,000.00 INVESTIGATIVE AND LEGALCOSTS.


Disclosure 37 of 54

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Initiated By: NASD







Allegations: ARTICLE V, SECTION 2(C) OF THE NASD BY-LAWS, NASD RULE 2110 -LINSCO/PRIVATE LEDGER CORP. FAILED TO TIMELY AMENDREPRESENTATIVES' FORMS U4 WITH MATERIAL INFORMATION.



Resolution:




No










Initiated By: NASD







Allegations: ARTICLE V, SECTION 2(C) OF THE NASD BY-LAWS, NASD RULE 2110 -LINSCO/PRIVATE LEDGER CORP. FAILED TO TIMELY AMENDREPRESENTATIVES' FORMS U4 WITH MATERIAL INFORMATION.



Resolution:





Disclosure 38 of 54

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Allegations: NASD RULES 3010 AND 2110 - DURING THE PERIOD JANUARY 1, 2003, TODECEMBER 31, 2004 THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE AN ADEQUATE SUPERVISORY SYSTEM, INCLUDING WRITTENPROCEDURES, REASONABLY DESIGNED TO REVIEW AND MONITOR ITSVARIABLE ANNUITY EXCHANGE BUSINESS. THE FIRM'S SUPERVISORYSYSTEM ALSO RELIED, IN SIGNIFICANT PART, UPON AUTOMATED, CODEDREPORTS TO EVALUATE ITS VARIABLE ANNUITY EXCHANGES. THOSEAUTOMATED REPORTS FAILED TO CAPTURE CERTAIN INFORMATIONNECESSARY FOR THE PROPER EVALUATION OF EXCHANGES, SUCH ASWHETHER A DEATH BENEFIT WAS LOST, A COMPARISON OF CONTRACTCHARGES, AND A DETAILED REASON FOR THE EXCHANGE. IN ADDITION,THE FIRM'S REGISTERED REPRESENTATIVES OCCASIONALLY FAILED TOCODE THEIR EXCHANGE TRANSACTIONS CORRECTLY ON THEAUTOMATED REPORTS, WHICH MAY HAVE CAUSED COMPLIANCEANALYSTS NOT TO IDENTIFY AND REVIEW CERTAIN TRANSACTIONS ASEXCHANGES. THE FIRM'S POLICIES AND PROCEDURES CALLED FOR THEREVIEW OF VARIABLE ANNUITY TRANSACTIONS, INCLUDING ALLEXCHANGES, BY REGISTERED PRINCIPALS AS FOLLOWS: OFFICE OFSUPERVISORY JURISDICTION ("OSJ") PRINCIPALS PERFORMED THEINITIAL REVIEW AND APPROVAL OF VARIABLE ANNUITY EXCHANGETRANSACTIONS SUBMITTED BY REGISTERED REPRESENTATIVES UNDERTHEIR SUPERVISION (INCLUDING REGISTERED REPRESENTATIVESWORKING AT NON-OSJ BRANCH LOCATIONS). COMPLIANCE ANALYSTS INTHE FIRM'S COMPLIANCE DEPARTMENT REVIEWED AND APPROVEDVARIABLE ANNUITY EXCHANGE TRANSACTIONS SUBMITTED BY OSJPRINCIPALS. REGISTERED PRINCIPALS IN THE FIRM'S COMPLIANCEDEPARTMENT ALSO EXAMINED CERTAIN TRANSACTIONS LISTED ONSURVEILLANCE REPORTS UTILIZED BY THE FIRM TO IDENTIFYTRANSACTIONS THAT MIGHT WARRANT ADDITIONAL SUPERVISORYREVIEW. *ALLEGATIONS CONTINUED IN THE COMMENTS SECTION.








Initiated By: NASD




Docket/Case Number: EAF0400610003



NECESSARY FOR THE PROPER EVALUATION OF EXCHANGES, SUCH ASWHETHER A DEATH BENEFIT WAS LOST, A COMPARISON OF CONTRACTCHARGES, AND A DETAILED REASON FOR THE EXCHANGE. IN ADDITION,THE FIRM'S REGISTERED REPRESENTATIVES OCCASIONALLY FAILED TOCODE THEIR EXCHANGE TRANSACTIONS CORRECTLY ON THEAUTOMATED REPORTS, WHICH MAY HAVE CAUSED COMPLIANCEANALYSTS NOT TO IDENTIFY AND REVIEW CERTAIN TRANSACTIONS ASEXCHANGES. THE FIRM'S POLICIES AND PROCEDURES CALLED FOR THEREVIEW OF VARIABLE ANNUITY TRANSACTIONS, INCLUDING ALLEXCHANGES, BY REGISTERED PRINCIPALS AS FOLLOWS: OFFICE OFSUPERVISORY JURISDICTION ("OSJ") PRINCIPALS PERFORMED THEINITIAL REVIEW AND APPROVAL OF VARIABLE ANNUITY EXCHANGETRANSACTIONS SUBMITTED BY REGISTERED REPRESENTATIVES UNDERTHEIR SUPERVISION (INCLUDING REGISTERED REPRESENTATIVESWORKING AT NON-OSJ BRANCH LOCATIONS). COMPLIANCE ANALYSTS INTHE FIRM'S COMPLIANCE DEPARTMENT REVIEWED AND APPROVEDVARIABLE ANNUITY EXCHANGE TRANSACTIONS SUBMITTED BY OSJPRINCIPALS. REGISTERED PRINCIPALS IN THE FIRM'S COMPLIANCEDEPARTMENT ALSO EXAMINED CERTAIN TRANSACTIONS LISTED ONSURVEILLANCE REPORTS UTILIZED BY THE FIRM TO IDENTIFYTRANSACTIONS THAT MIGHT WARRANT ADDITIONAL SUPERVISORYREVIEW. *ALLEGATIONS CONTINUED IN THE COMMENTS SECTION.


Resolution:


No







http://disciplinaryactions.finra.org/Search.aspx?CaseNB=EAF0400610003


Other Sanctions Ordered: UNDERTAKINGS: RETAIN, WITHIN SIX MONTHS FROM THE DATE OF THISAWC, AN INDEPENDENT CONSULTANT ("CONSULTANT"), NOTUNACCEPTABLE TO NASD, TO CONDUCT A REVIEW TO DETERMINEWHETHER CERTAIN IMPROVEMENTS HAVE BEEN APPROPRIATELYIMPLEMENTED, WHETHER SUPERVISORY PERSONNEL ARE CONDUCTINGTHE REVIEWS AS PRESCRIBED AND DOCUMENTING THEIR EFFORTS, ANDWHETHER THE SYSTEMS AND PROCEDURES ARE ADEQUATE.COOPERATE WITH THE CONSULTANT IN ALL RESPECTS, INCLUDING BYPROVIDING STAFF SUPPORT. AT THE CONCLUSION OF THE REVIEW,WHICH SHALL BE NO MORE THAN FOUR MONTHS AFTER THECONSULTANT IS RETAINED; REQUIRE THE CONSULTANT TO SUBMIT TOTHE FIRM AND NASD A WRITTEN REPORT ("REPORT"). WITHIN 90 DAYSAFTER DELIVERY OF THE REPORT, THE FIRM SHALL ADOPT ANDIMPLEMENT THE RECOMMENDATIONS OF THE CONSULTANT OR PROPOSEAN ALTERNATIVE PROCEDURE TO THE CONSULTANT DESIGNED TOACHIEVE THE SAME OBJECTIVE. WITHIN 30 DAYS AFTER THE ISSUANCEOF THE LATER OF THE CONSULTANT'S REPORT REGARDING ALTERNATIVEOR MODIFIED PROCEDURES, THE FIRM SHALL PROVIDE THE NASD STAFFWITH A WRITTEN IMPLEMENTATION REPORT, CERTIFIED BY AN OFFICEROF THE FIRM, ATTESTING TO, CONTAINING DOCUMENTATION OF, ANDSETTING FORTH THE DETAILS OF THE FIRM'S IMPLEMENTATION OF THECONSULTANT'S RECOMMENDATIONS. WITHIN 90 DAYS AFTER THEISSUANCE OF THE LATER OF THE CONSULTANT'S REPORT REGARDING

ALTERNATIVE OR MODIFIED PROCEDURES, THE FIRM SHALLCERTIFY THAT IT HAS PROVIDED THE FOLLOWING TRAININGRELATING TO THE FIRM'S AUTOMATED SUPERVISORY SYSTEMS FORREVIEWING AND MONITORING VARIABLE ANNUITY TRANSACTIONS:TRAINING FOR ALL OF THE FIRM'S REGISTERED PERSONS ON HOW TOCORRECTLY INPUT INFORMATION FOR USE BY THE FIRM'S AUTOMATED

SUPERVISORY SYSTEMS; AND TRAINING FOR ALL OF THE FIRM'SPRINCIPALS RESPONSIBLE FOR REVIEWING AND APPROVING VARIABLEANNUITY TRANSACTIONS ON HOW TO UTILIZE AND INTERPRET THEREPORTS GENERATED BY THE FIRM'S AUTOMATED SUPERVISORYSYSTEMS IN ORDER TO PROPERLY REVIEW AND MONITOR VARIABLEANNUITY TRANSACTIONS.

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $300,000 AND REQUIREDTO COMPLY WITH UNDERTAKINGS.

Regulator Statement *ALLEGATIONS CONTINUED: IN REVIEWING VARIABLE ANNUITY EXCHANGETRANSACTIONS, THESE OSJ PRINCIPALS AND COMPLIANCE DEPARTMENTPRINCIPALS HAD AVAILABLE TO THEM VARIOUS SOURCES OF RELEVANTINFORMATION, INCLUDING NEW ACCOUNT DOCUMENTATION, ACCOUNTRECORDS, APPLICATIONS AND TRANSACTIONAL PAPERWORK,PROSPECTUSES OR OTHER OFFERING DOCUMENTS, CUSTOMERCORRESPONDENCE AND REGISTERED REPRESENTATIVE NOTES.HOWEVER, THE FIRM'S WRITTEN POLICIES AND PROCEDURES DID NOTREQUIRE THAT ITS PRINCIPALS UTILIZE THESE SOURCES OFINFORMATION AND THE FIRM DID NOT PROVIDE ADEQUATE GUIDANCE TOITS PRINCIPALS REGARDING WHEN OR HOW TO UTILIZE SOME OF SUCHINFORMATION. THE FIRM'S WRITTEN PROCEDURES ALSO PROVIDEDINSUFFICIENT GUIDANCE TO COMPLIANCE ANALYSTS IN ASSESSING THESUITABILITY OF A VARIABLE ANNUITY EXCHANGE. THE PROCEDURESSUGGESTED THAT ANALYSTS REVIEW CERTAIN CATEGORIES OFINFORMATION, SUCH AS INVESTMENT OBJECTIVES, AGE, AND FINANCIALINFORMATION. THE PROCEDURES ALSO SUGGESTED THAT ANALYSTSFURTHER REVIEW A VARIABLE ANNUITY EXCHANGE IF IT MET CERTAINPARAMETERS. HOWEVER, IN SOME CASES, CERTAIN INFORMATIONNEEDED FOR THE REVIEW, SUCH AS, WHETHER THE OSJ PRINCIPAL ORREGISTERED REPRESENTATIVE WAS THE AGENT OF RECORD ON THEORIGINAL CONTRACT THAT WAS BEING EXCHANGED AND WHETHER THEFACTS AND CIRCUMSTANCES OF EACH TRANSACTION SUPPORTED THERATIONALE FOR THE EXCHANGE, WAS NOT READILY AVAILABLE TOSUPERVISORY PERSONNEL.







INFORMATION, INCLUDING NEW ACCOUNT DOCUMENTATION, ACCOUNTRECORDS, APPLICATIONS AND TRANSACTIONAL PAPERWORK,PROSPECTUSES OR OTHER OFFERING DOCUMENTS, CUSTOMERCORRESPONDENCE AND REGISTERED REPRESENTATIVE NOTES.HOWEVER, THE FIRM'S WRITTEN POLICIES AND PROCEDURES DID NOTREQUIRE THAT ITS PRINCIPALS UTILIZE THESE SOURCES OFINFORMATION AND THE FIRM DID NOT PROVIDE ADEQUATE GUIDANCE TOITS PRINCIPALS REGARDING WHEN OR HOW TO UTILIZE SOME OF SUCHINFORMATION. THE FIRM'S WRITTEN PROCEDURES ALSO PROVIDEDINSUFFICIENT GUIDANCE TO COMPLIANCE ANALYSTS IN ASSESSING THESUITABILITY OF A VARIABLE ANNUITY EXCHANGE. THE PROCEDURESSUGGESTED THAT ANALYSTS REVIEW CERTAIN CATEGORIES OFINFORMATION, SUCH AS INVESTMENT OBJECTIVES, AGE, AND FINANCIALINFORMATION. THE PROCEDURES ALSO SUGGESTED THAT ANALYSTSFURTHER REVIEW A VARIABLE ANNUITY EXCHANGE IF IT MET CERTAINPARAMETERS. HOWEVER, IN SOME CASES, CERTAIN INFORMATIONNEEDED FOR THE REVIEW, SUCH AS, WHETHER THE OSJ PRINCIPAL ORREGISTERED REPRESENTATIVE WAS THE AGENT OF RECORD ON THEORIGINAL CONTRACT THAT WAS BEING EXCHANGED AND WHETHER THEFACTS AND CIRCUMSTANCES OF EACH TRANSACTION SUPPORTED THERATIONALE FOR THE EXCHANGE, WAS NOT READILY AVAILABLE TOSUPERVISORY PERSONNEL.


Initiated By: NASD




Docket/Case Number: EAF0400610003



Allegations: NASD ALLEGED THAT, DURING DURING THE PERIOD JANUARY 1, 2003, TODECEMBER 31, 2004, THE FIRM FAILED TO ESTABLISH, MAINTAIN, ANDENFORCE AN ADEQUATE SUPERVISORY SYSTEM, INCLUDING WRITTENPROCEDURES, REASONABLY DESIGNED TO REVIEW AND MONITOR ITSVARIABLE ANNUITY EXCHANGE BUSINESS IN VIOLATION OF NASD RULES3010 AND 2110.










Resolution:

Other Sanctions Ordered: UNDERTAKINGS: RETAIN, WITHIN SIX MONTHS FROM THE DATE OF THISAWC, AN INDEPENDENT CONSULTANT ("CONSULTANT"), NOTUNACCEPTABLE TO NASD, TO CONDUCT A REVIEW TO DETERMINEWHETHER CERTAIN IMPROVEMENTS HAVE BEEN APPROPRIATELYIMPLEMENTED, WHETHER SUPERVISORY PERSONNEL ARE CONDUCTINGTHE REVIEWS AS PRESCRIBED AND DOCUMENTING THEIR EFFORTS, ANDWHETHER THE SYSTEMS AND PROCEDURES ARE ADEQUATE.COOPERATE WITH THE CONSULTANT IN ALL RESPECTS, INCLUDING BYPROVIDING STAFF SUPPORT. AT THE CONCLUSION OF THE REVIEW,WHICH SHALL BE NO MORE THAN FOUR MONTHS AFTER THECONSULTANT IS RETAINED; REQUIRE THE CONSULTANT TO SUBMIT TOTHE FIRM AND NASD A WRITTEN REPORT ("REPORT"). WITHIN 90 DAYSAFTER DELIVERY OF THE REPORT, THE FIRM SHALL ADOPT ANDIMPLEMENT THE RECOMMENDATIONS OF THE CONSULTANT OR PROPOSEAN ALTERNATIVE PROCEDURE TO THE CONSULTANT DESIGNED TOACHIEVE THE SAME OBJECTIVE. WITHIN 30 DAYS AFTER THE ISSUANCEOF THE LATER OF THE CONSULTANT'S REPORT REGARDING ALTERNATIVEOR MODIFIED PROCEDURES, THE FIRM SHALL PROVIDE THE NASD STAFFWITH A WRITTEN IMPLEMENTATION REPORT, CERTIFIED BY AN OFFICEROF THE FIRM, ATTESTING TO, CONTAINING DOCUMENTATION OF, ANDSETTING FORTH THE DETAILS OF THE FIRM'S IMPLEMENTATION OF THECONSULTANT'S RECOMMENDATIONS. WITHIN 90 DAYS AFTER THEISSUANCE OF THE LATER OF THE CONSULTANT'S REPORT REGARDINGALTERNATIVE OR MODIFIED PROCEDURES, THE FIRM SHALL CERTIFYTHAT IT HAS PROVIDED THE FOLLOWING TRAINING RELATING TO THEFIRM'S AUTOMATED SUPERVISORY SYSTEMS FOR REVIEWING ANDMONITORING VARIABLE ANNUITY TRANSACTIONS: TRAINING FOR ALL OFTHE FIRM'S REGISTERED PERSONS ON HOW TO CORRECTLY INPUTINFORMATION FOR USE BY THE FIRM'S AUTOMATED SUPERVISORYSYSTEMS; AND TRAINING FOR ALL OF THE FIRM'S PRINCIPALSRESPONSIBLE FOR REVIEWING AND APPROVING VARIABLE ANNUITYTRANSACTIONS ON HOW TO UTILIZE AND INTERPRET THE REPORTSGENERATED BY THE FIRM'S AUTOMATED SUPERVISORY SYSTEMS INORDER TO PROPERLY REVIEW AND MONITOR VARIABLE ANNUITYTRANSACTIONS.

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $300,000 AND REQUIREDTO COMPLY WITH UNDERTAKINGS.








Sanction Details:TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED AND FINED $300,000 AND REQUIREDTO COMPLY WITH UNDERTAKINGS.

Disclosure 39 of 54

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Initiated By: TEXAS


Reprimand


ADMINISTRATIVE FINE






Allegations: LINSCO/PRIVATE LEDGER CORPORATIONS FAILED TO TIMELY UPDATE ITSFORM BD TO REFLECT THE USE OF OTHER BUSINESS NAMES INCONNECTION WITH SECURITIES ACTIVITY BY CERTAIN OFLINSCO/PRIVATE LEDGER CORPORATION'S BRANCH OFFICES AND OTHERBUSINESS LOCATIONS IN TEXAS.



Resolution:

Other Sanctions Ordered: LINSCO/PRIVATE LEDGER CORP. HAS BEEN REPRIMANDED.

Sanction Details: NO OTHER SANCTIONS TO FOLLOW.


No


Order

iReporting Source:








Initiated By: TEXAS


Reprimand


ADMINISTRATIVE FINE





Allegations: LINSCO / PRIVATE LEDGER CORP. FAILED TO TIMELY UPDATE IT'S FORM BDTO REFLECT THE USE OF OTHER BUSINESS NAMES IN CONNECTION WITHSECURITIES ACTIVITIY BY CERTAIN OF LPL'S BRANCH OFFICES AN OTHERBUSINESS LOCATIONS IN TEXAS.



Resolution:

Other Sanctions Ordered: REPRIMANDED

Sanction Details: NO OTHER SANCTIONS TO FOLLOW.


Order

Disclosure 40 of 54

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Initiated By: NASD



Allegations: NASD RULES 2711(F)(5) AND 2110 - RESPONDENT MEMBER FAILED TOCOMPLY WITH NASD RULE 2711(F)(5) WHEN TERMINATING RESEARCHCOVERAGE OF SUBJECT COMPANIES IN THAT, IT FAILED TO MAKEAVAILABLE A FINAL RESEARCH REPORT; NOTICE OF SUSPENSION OFCOVERAGE DID NOT COMPLY WITH THE REQUIREMENTS OF NASDCONDUCT RULE 2711(F)(5).














Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO PRIVATELEDGER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRYOF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED $5,000.


No




Initiated By: NASD


Censure





Allegations: NASD RULES 2711(F)(5) AND 2110 - RESPONDENT MEMBER FAILED TOCOMPLY WITH NASD RULLE 2711(F)(5) WHEN TERMINATING RESEARCHCOVERAGE OF SUBJECT COMPANIES IN THAT, IT FAILED TO MAKEAVAILABLE A FINE RESEARCH REPORT; NOTICE OF SUSPENSION OFCOVERAGE DID NOT COMPLY WITH THE REQUIREMENTS OF NASDCONDUCT RULE 2711(F)(5).









Censure


FINE


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO/PRIVATELEDGER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRYOF FINDINGS. THEREFORE, THE FIRM IS CENSUREED AND FINED $5,000.



Disclosure 41 of 54

i


Initiated By: NASD

Allegations: NASD CONDUCT RULES 2110, 2310 AND 3010-RESPONDENT FIRM'SSUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURESREGARDING CLASS B AND CLASS C SHARES WERE INADEQUATE. THEFIRM ALSO FAILED TO PROVIDE ADEQUATE TRAINING OF THE AVAILABLEMUTUAL FUND CLASSES, BASED UPON THE PARTICULAR FUND'SPRINCIPAL CONSIDERATIONS, INCLUDING APPLICABLE AGGREGATIONRIGHTS. THE FIRM ALSO FAILED TO ESTABLISH, MAINTAIN, AND ENFORCESUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURES. THEFIRM'S PROCEDURES WERE NOT SUFFICIENT TO ENSURE THATFINANCIAL ADVISORS, WHEN RECOMMENDING MUTUAL FUND SHARES TOCUSTOMERS, ADEQUATELY DISCLOSED THAT SUCH SHARES WERESUBJECT TO HIGHER ANNUAL FEES THAT COULD HAVE A NEGATIVEIMPACT ON THE CUSTOMERS' INVESTMENT RETURN OR ONCEBREAKPOINTS BECOME AVAILABLE, AN EQUAL INVESTMENT IN CLASS ASHARES COULD YIELD A HIGHER RETURN, AND QUANTIFIED THEPOTENTIAL MONETARY DIFFERENCE BETWEEN PURCHASING CLASS ASHARES, CLASS B SHARES AND CLASS C SHARES FOR THE PERIOD THEIRCUSTOMERS' ANTICIPATED HOLDING INVESTMENT. THE FIRM'S FINANCIALADVISORS DID NOT DISCLOSE AT THE POINT OF PURCHASE ORADEQUATELY CONSIDER, ON A CONSISTENT BASIS, SUITABILITYELEMENTS WHEN MAKING RECOMMENDATIONS TO CUSTOMERS TOPURCHASE CLASS B AND CLASS C SHARES INSTEAD OF CLASS A SHARES.














Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $2,400,000. FORSPECIFIC UNDERTAKINGS SEE THE AWC.


No




Allegations: NASD CONDUCT RULES 2110, 2310 AND 3010-RESPONDENT FIRM'SSUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURESREGARDING CLASS B AND CLASS C SHARES WERE INADEQUATE. THEFIRM ALSO FAILED TO PROVIDE ADEQUATE TRAINING OF THE AVAILABLEMUTUAL FUND CLASSES, BASED UPON THE PARTICULAR FUND'SPRINCIPAL CONSIDERATIONS, INCLUDING APPLICABLE AGGREGATIONRIGHTS. THE FIRM ALSO FAILED TO ESTABLISH, MAINTAIN, AND ENFORCESUPERVISORY AND COMPLIANCE POLICIES AND PROCEDURES. THEFIRM'S PROCEDURES WERE NOT SUFFICIENT TO ENSURE THATFINANCIAL ADVISORS, WHEN RECOMMENDING MUTUAL FUND SHARES TOCUSTOMERS, ADEQUATELY DISCLOSED THAT SUCH SHARES WERESUBJECT TO HIGHER ANNUAL FEES THAT COULD HAVE A NEGATIVEIMPACT ON THE CUSTOMERS' INVESTMENT RETURN OR ONCEBREAKPOINTS BECOME AVAILABLE, AN EQUAL INVESTMENT IN CLASS ASHARES COULD YIELD A HIGHER RETURN, AND QUANTIFIED THEPOTENTIAL MONETARY DIFFERENCE BETWEEN PURCHASING CLASS ASHARES, CLASS B SHARES AND CLASS C SHARES FOR THE PERIOD THEIRCUSTOMERS' ANTICIPATED HOLDING INVESTMENT. THE FIRM'S FINANCIALADVISORS DID NOT DISCLOSE AT THE POINT OF PURCHASE ORADEQUATELY CONSIDER, ON A CONSISTENT BASIS, SUITABILITYELEMENTS WHEN MAKING RECOMMENDATIONS TO CUSTOMERS TOPURCHASE CLASS B AND CLASS C SHARES INSTEAD OF CLASS A SHARES.








Initiated By: NASD


Censure


FINE AND UNDERTAKINGS


Docket/Case Number: E1120030718-01



SUBJECT TO HIGHER ANNUAL FEES THAT COULD HAVE A NEGATIVEIMPACT ON THE CUSTOMERS' INVESTMENT RETURN OR ONCEBREAKPOINTS BECOME AVAILABLE, AN EQUAL INVESTMENT IN CLASS ASHARES COULD YIELD A HIGHER RETURN, AND QUANTIFIED THEPOTENTIAL MONETARY DIFFERENCE BETWEEN PURCHASING CLASS ASHARES, CLASS B SHARES AND CLASS C SHARES FOR THE PERIOD THEIRCUSTOMERS' ANTICIPATED HOLDING INVESTMENT. THE FIRM'S FINANCIALADVISORS DID NOT DISCLOSE AT THE POINT OF PURCHASE ORADEQUATELY CONSIDER, ON A CONSISTENT BASIS, SUITABILITYELEMENTS WHEN MAKING RECOMMENDATIONS TO CUSTOMERS TOPURCHASE CLASS B AND CLASS C SHARES INSTEAD OF CLASS A SHARES.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS; THEREFORE, FIRM IS CENSURED AND FINED $2,400,000.



Disclosure 42 of 54

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Initiated By: NASD

Allegations: NASD RULES 2110, 3010(A), 3010(B) - RESPONDENT MEMBER FAILED TOESTABLISH, MAINTAIN AND ENFORCE A REASONABLE SYSTEM ORWRITTEN PROCEDURES TO SUPERVISE THE ACTIVITIES OF REGISTEREDPERSONS IN CONNECTION WITH THEIR USE OF WIRE TRANSFERS.








Initiated By: NASD








Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LISCO / PRIVATELEDGER CORPORATION, CONSENTED TO THE DESCRIBED SANCTIONSAND TO THE ENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSUREDAND FINED $75,000.


No




Initiated By: NASD




Allegations: NASD RULES 2110, 3010(A), 3010(B) - RESPONDENT MEMBER FAILED TOESTABLISH, MAINTAIN AND ENFORCE A REASONABLE SYSTEM ORWRITTEN PROCEDURES TO SUPERVISE THE ACTIVITIES OF REGISTEREDPERSONS IN CONNECTION WITH THEIR USE OF WIRE TRANSFERS.










Censure


FINE




Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO / PRIVATELEDGER CORP., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS, THEREFORE THE FIRM IS CENSURED AND FINED$75,000.



Disclosure 43 of 54

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Initiated By: NASD




Docket/Case Number: CE4050009



Allegations: NASD CONDUCT RULES 2830(K) AND 2110; LINSCO/PRIVATE LEDGER CORP.MAINTAINED SHELF SPACE (OR REVENUE SHARING) PROGRAMS IN WHICHPARTICIPATING MUTUAL FUND COMPLEXES PAID A FEE IN RETURN FORPREFERENTIAL TREATMENT, WHICH INCLUDED ENHANCED ACCESS TOTHE FIRM'S SALES FORCE, PARTICIPATION IN FIRM MEETINGS ANDPLACEMENT OF PROMOTIONAL MATERIAL ON THE FIRM'S INTERNALWEBSITE. ONE FUND COMPLEX PAID ALL, AND SOME PAID PART OF THEIRFEES FOR PARTICIPATING IN THE PROGRAMS BY DIRECTING BROKERAGECOMMISSIONS TO THE FIRM.






http://disciplinaryactions.finra.org/Search.aspx?CaseNB=CE4050009




Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS LINSCO/PRIVATELEDGER CORP. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS THEREFORE, THE FIRM IS CENSURED AND FINED$3,602,398.00.


No




Initiated By: NASD


Censure


FINE


Docket/Case Number: CE4050009



Allegations: NASD CONDUCT RULES 2830(K) AND 2110; LINSCO/PRIVATE LEDGER CORP.MAINTAINED SHELF SPACE (OR REVENUE SHARING) PROGRAMS IN WHICHPARTICIPATING MUTUAL FUND COMPLEXES PAID A FEE IN RETURN FORPREFERENTIAL TREATMENT, WHICH INCLUDED ENHANCED ACCESS TOTHE FIRM'S SALES FORCE, PARTICIPATION IN FIRM MEETINGS ANDPLACEMENT OF PROMOTIONAL MATERIAL ON THE FIRM'S INTERNALWEBSITE. ONE FUND COMPLEX PAID ALL, AND SOME PAID PART OF THEIRFEES FOR PARTICIPATING IN THE PROGRAMS BY DIRECTING BROKERAGECOMMISSIONS TO THE FIRM.









FINE


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS LINSCO/PRIVATELEDGER CORP. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS THEREFORE, THE FIRM IS CENSURED AND FINED$3,602,398.00.



Disclosure 44 of 54

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Initiated By: NASD




Docket/Case Number: CAF040093



Allegations: ARTICLE V, SECTIONS 2(C) AND 3(B) OF NASD'S BY-LAWS, AND NASDRULES 2110 AND 3010 - LINSCO/PRIVATE LEDGER CORP. ("RESPONDENTFIRM") FILED AT LEAST 390 LATE AMENDMENTS TO FORMS U4 AND U5,WHICH REPRESENTED APPROXIMATELY 71% OF THE REQUIREDAMENDMENTS RELATING TO REPORTABLE CUSTOMER COMPLAINTS,TERMINATIONS, REGULATORY ACTIONS, AND CRIMINAL DISCLOSURES.DURING THE RELEVANT PERIOD, THE RESPONDENT FIRM'S SUPERVISORYSYSTEM AND PROCEDURES WERE NOT REASONABLY DESIGNED TOACHIEVE COMPLIANCE WITH ITS ARTICLE V REPORTING OBLIGATIONS.



Resolution: Acceptance, Waiver & Consent(AWC)







Resolution Date:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, IT IS CENSURED AND FINED $450,000, WHICHSHALL BE PAID WITHIN 10 DAYS OF NOTICE OF ACCEPTANCE OF THISAWC. IN ADDITION RESPONDENT FIRM SHALL COMPLY WITH THEFOLLOWING UNDERTAKINGS: (1) PROMPTLY FOLLOWING NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM'S INTERNAL AUDIT DEPARTMENTOR PERSONNEL NOT DIRECTLY RESPONSIBLE FOR THE FIRM'S ARTICLE VREPORTING OBLIGATIONS AND THEIR IMMEDIATE SUPERVISORS SHALLCONDUCT AN AUDIT TO ASSESS THE EFFECTIVENESS OF ITS SYSTEM ANDPROCEDURES FOR ENSURING TIMELY FILING OF FORM U4 AND U5AMENDMENTS SUMMARIZING FINDINGS AND RECOMMENDATIONS ANDSHALL FOR THE NEXT FOUR CALENDAR QUARTERS BEGINNING FOURTHQUARTER 2004, CONDUCT A SIMILAR AUDIT AND PREPARE A SIMILARWRITTEN AUDIT REPORT. (2) NO LATER THAN 90 DAYS AFTER NOTICE OFACCEPTANCE OF THIS AWC, AN OFFICER OF THE FIRM SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED AND THE OFFICERHAS REVIEWED THE CURRENT AUDIT REPORT. (3) NO LATER THAN 60DAYS AFTER THE DATE OF THE CURRENT AUDIT REPORT, AN OFFICERSHALL CERTIFY IN WRITING TO NASD THAT THE FIRM HAS IMPLEMENTED,OR HAS BEGUN TO IMPLEMENT, ANY RECOMMENDATIONS WITHIN ASPECIFIED TIME PERIOD. (4) NO LATER THAN 60 DAYS AFTER THE LASTDAY OF THE NEXT FOUR QUARTERS, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED, THE CURRENT AUDITREPORT WAS REVIEWED, AND RECOMMENDATIONS IMPLEMENTED, ORBEGUN TO BE IMPLEMENTED. (5) NO LATER THAN SIX MONTHS AFTERNOTICE OF ACCEPTANCE OF THIS AWC, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT THE FIRM HAS REVIEWED ITS SYSTEM ANDPROCEDURES FOR COMPLYING WITH ITS ARTICLE V REPORTINGOBLIGATIONS AND HAS ESTABLISHED A SYSTEM AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH REPORTINGREQUIREMENTS SET FORTH THEREIN.


No


iReporting Source:







Initiated By: NASD


Censure






Allegations: NASD ALLEGED VIOLATIONS OF ARTICLE V, SECTIONS 2(C) AND 3(B) OFNASD BY-LAWS AND NASD RULES 2110 AND 3010. MATTER AROSE OUT OF390 LATE FILINGS OF AMENDMENTS TO FORMS U4 AND U5 FROM JANUARY2002 THROUGH MARCH 2004. NASD ALLEGED THAT FIRM'S SUPERVISORYSYSTEM AND PROCEDURES WERE INADEQUATE TO ACHIEVECOMPLIANCE WITH ITS ARTICLE V REPORTING OBLIGATIONS.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, IT IS CENSURED AND FINED $450,000, WHICHSHALL BE PAID WITHIN 10 DAYS OF NOTICE OF ACCEPTANCE OF THISAWC. IN ADDITION RESPONDENT FIRM SHALL COMPLY WITH THEFOLLOWING UNDERTAKINGS: (1) PROMPTLY FOLLOWING NOTICE OFACCEPTANCE OF THIS AWC, THE FIRM'S INTERNAL AUDIT DEPARTMENTOR PERSONNEL NOT DIRECTLY RESPONSIBLE FOR THE FIRM'S ARTICLE VREPORTING OBLIGATIONS AND THEIR IMMEDIATE SUPERVISORS SHALLCONDUCT AN AUDIT TO ASSESS THE EFFECTIVENESS OF ITS SYSTEM ANDPROCEDURES FOR ENSURING TIMELY FILING OF FORM U4 AND U5AMENDMENTS SUMMARIZING FINDINGS AND RECOMMENDATIONS ANDSHALL FOR THE NEXT FOUR CALENDAR QUARTERS BEGINNING FOURTHQUARTER 2004, CONDUCT A SIMILAR AUDIT AND PREPARE A SIMILARWRITTEN AUDIT REPORT. (2) NO LATER THAN 90 DAYS AFTER NOTICE OFACCEPTANCE OF THIS AWC, AN OFFICER OF THE FIRM SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED AND THE OFFICERHAS REVIEWED THE CURRENT AUDIT REPORT. (3) NO LATER THAN 60DAYS AFTER THE DATE OF THE CURRENT AUDIT REPORT, AN OFFICERSHALL CERTIFY IN WRITING TO NASD THAT THE FIRM HAS IMPLEMENTED,OR HAS BEGUN TO IMPLEMENT, ANY RECOMMENDATIONS WITHIN ASPECIFIED TIME PERIOD. (4) NO LATER THAN 60 DAYS AFTER THE LASTDAY OF THE NEXT FOUR QUARTERS, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED, THE CURRENT AUDITREPORT WAS REVIEWED, AND RECOMMENDATIONS IMPLEMENTED, ORBEGUN TO BE IMPLEMENTED. (5) NO LATER THAN SIX MONTHS AFTERNOTICE OF ACCEPTANCE OF THIS AWC, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT THE FIRM HAS REVIEWED ITS SYSTEM ANDPROCEDURES FOR COMPLYING WITH ITS ARTICLE V REPORTINGOBLIGATIONS AND HAS ESTABLISHED A SYSTEM AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH REPORTINGREQUIREMENTS SET FORTH THEREIN.









WRITTEN AUDIT REPORT. (2) NO LATER THAN 90 DAYS AFTER NOTICE OFACCEPTANCE OF THIS AWC, AN OFFICER OF THE FIRM SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED AND THE OFFICERHAS REVIEWED THE CURRENT AUDIT REPORT. (3) NO LATER THAN 60DAYS AFTER THE DATE OF THE CURRENT AUDIT REPORT, AN OFFICERSHALL CERTIFY IN WRITING TO NASD THAT THE FIRM HAS IMPLEMENTED,OR HAS BEGUN TO IMPLEMENT, ANY RECOMMENDATIONS WITHIN ASPECIFIED TIME PERIOD. (4) NO LATER THAN 60 DAYS AFTER THE LASTDAY OF THE NEXT FOUR QUARTERS, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT AN AUDIT WAS CONDUCTED, THE CURRENT AUDITREPORT WAS REVIEWED, AND RECOMMENDATIONS IMPLEMENTED, ORBEGUN TO BE IMPLEMENTED. (5) NO LATER THAN SIX MONTHS AFTERNOTICE OF ACCEPTANCE OF THIS AWC, AN OFFICER SHALL CERTIFY INWRITING TO NASD THAT THE FIRM HAS REVIEWED ITS SYSTEM ANDPROCEDURES FOR COMPLYING WITH ITS ARTICLE V REPORTINGOBLIGATIONS AND HAS ESTABLISHED A SYSTEM AND PROCEDURESREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH REPORTINGREQUIREMENTS SET FORTH THEREIN.

Disclosure 45 of 54

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Initiated By: NASD


Docket/Case Number: C05040072


Allegations: MSRB RULES G-17 AND G-30(A) - PUBLIC CUSTOMERS REQUESTED THATLINSCO/PRIVATE LEDGER CORP. LIQUIDATE TWO DIFFERENT MUNICIPALSECURITY POSITIONS LINSCO/PRIVATE LEDGER CORP. CONTRACTED ABROKER'S BROKER AND OBTAINED BIDS FOR THE CUSTOMERS'SECURITIES. BASED ON THE BIDS PROVIDED BY THE BROKER'S BROKER,THE FIRM PURCHASED THE SECURITIES FROM THE CUSTOMERS FOR ITSOWN ACCOUNT AND THEN SOLD THE SECURITIES TO THE BROKER'SBROKER AT A NOMINAL GAIN. IN BOTH INSTANCES, THE PRICES PAID TOTHE CUSTOMERS, AND RECEIVED BY THE FIRM, WERE BELOW THE FAIRMARKET VALUE OF EACH SECURITY, IN AMOUNTS RANGING FROM 17.81%TO 20.01%. BY RELYING SOLELY ON THE BIDS PROVIDED BY THEBROKER'S BROKER TO DETERMINE THE FAIR MARKET VALUE OF THESECURITY, LINSCO/PRIVATE LEDGER CORP. FAILED TO ENSURE THAT THETRANSACTIONS WERE EXECUTED AT AGGREGATE PRICES THAT WEREFAIR AND REASONABLE.













Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO/PRIVATELEDGER CORP. CONSENTED TO THE DESCRIBED SANCTIONS AND TO THEENTRY OF FINDINGS; THEREFORE, THE FIRM IS CENSURED AND FINED INTHE AMOUNT OF $5,000. ALSO, LINSCO/PRIVATE LEDGER CORP. SHALL PAYTHE CUSTOMER RESTITUTION IN THE AMOUNT OF $4,662.00 PLUSINTEREST.ADDITIONALLY, WITHIN 90 DAYS OF THE ACCEPTANCE OF THIS AWC, THEFIRM SHALL PROVIDE NASD WITH A COPY OF ITS UPDATED WRITTENSUPERVISORY PROCEDURES AS THEY RELATE TO THE DETERMINATIONOF THE FAIR MARKET VALUE OF MUNICIPAL SECURITIES BEING BOUGHTOR SOLD FROM A PUBLIC CUSTOMER.


No




Allegations: NASD ALLEGED VIOLATIONS OF MRSB RULES G-17 AND G-30A. MATTERAROSE OUT OF TWO MUNICIPAL BOND LIQUIDATIONS. LINSCO/PRIVATELEDGER CONTRACTED A BROKER'S BROKER TO OBTAIN BIDS FOR THECUSTOMERS' SECURITIES. BASED ON THE BIDS PROVIDED BY THEBROKER'S BROKER, THE FIRM PURCHASED THE SECURITIES FROM THECUSTOMERS AND THEN SOLD THE SECURITIES TO THE BROKER'SBROKER AT A NOMINAL GAIN. ACCORDING TO THE NASD, THE PRICESPAID TO THE CUSTOMERS WERE BELOW THE FAIR MARKET VALUE OFEACH SECURITY. ACCORDING TO THE NASD, BY RELYING ON THE BIDSFROM THE BROKER'S BROKER, THE FIRM FAILED TO INSURE THAT THEPRICES WERE FAIR AND REASONABLE.







Initiated By: NASD


Censure



Docket/Case Number: C05040072



BROKER AT A NOMINAL GAIN. ACCORDING TO THE NASD, THE PRICESPAID TO THE CUSTOMERS WERE BELOW THE FAIR MARKET VALUE OFEACH SECURITY. ACCORDING TO THE NASD, BY RELYING ON THE BIDSFROM THE BROKER'S BROKER, THE FIRM FAILED TO INSURE THAT THEPRICES WERE FAIR AND REASONABLE.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS,LPL ENTERED INTOAN ACCEPTANCE, WAIVER AND CONSENT WITH THE NASD ON OCTOBER11,2004 THAT RESULTED IN A CENSURE AND FINE OF $5000.00,RESTITUTION OF $4,662.00 AND AN UNDERTAKING TO REVIEW ITSSUPERVISORY PROCEDURES AS THEY RELATE TO DETERMINING THEFAIR MARKET VALUE OF MUNICIPAL SECURITIES PURCHASED OR SOLDTHROUGH A BROKER'S BROKER FOR A PUBLIC CUSTOMER.



Disclosure 46 of 54

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Allegations: SEC ADMINISTRATIVE PROCEEDING RELEASE NOS. 33-8371 AND 34-49232,DATED FEBRUARY 12, 2004: THE SECURITIES AND EXCHANGECOMMISSION ("COMMISSION" OR "SEC") DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTEDPURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933("SECURITIES ACT") AND SECTIONS 15(B)(4) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST LINSCO/PRIVATELEDGER CORP. ("RESPONDENT").










Cease and Desist


CENSURE; FINE; AND DISGORGEMENT, PLUS PREJUDGEMENT INTEREST.





PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933("SECURITIES ACT") AND SECTIONS 15(B)(4) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST LINSCO/PRIVATELEDGER CORP. ("RESPONDENT").


Resolution:


Sanction Details: IT IS ORDERED: A. PURSUANT TO SECTION 15(B)(4) OF THE EXCHANGEACT, THAT RESPONDENT IS CENSURED; B. PURSUANT TO SECTION 8A OFTHE SECURITIES ACT AND SECTION 21C OF THE EXCHANGE ACT, THATRESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2) OF THE SECURITIES ACT, AND RULE 10B-10 UNDER THEEXCHANGE ACT; C. WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER,RESPONDENT SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$1,116,402.50 TO THE UNITED STATES TREASURY; D. RESPONDENT SHALLPAY DISGORGEMENT AND PREJUDGMENT INTEREST; AND E. NOT LATERTHAN 6 MONTHS AFTER THE DATE OF THIS ORDER, UNLESS OTHERWISEEXTENDED BY THE SEC FOR GOOD CAUSE SHOWN, RESPONDENT'SCHIEF EXECUTIVE OFFICER SHALL CERTIFY IN WRITING TO THE SEC THATRESPONDENT HAS IMPLEMENTED PROCEDURES, AND A SYSTEM FORAPPLYING PROCEDURES, THAT CAN REASONABLY BE EXPECTED TOPREVENT AND DETECT FAILURES BY RESPONDENT TO PROVIDEAPPROPRIATE BREAKPOINT DISCOUNTS FOR WHICH CUSTOMERS AREELIGIBLE ON PURCHASES OF FRONT-END LOAD MUTUAL FUNDS, BASEDON INFORMATION REASONABLY ASCERTAINABLE BY RESPONDENT.


No


Order







CHIEF EXECUTIVE OFFICER SHALL CERTIFY IN WRITING TO THE SEC THATRESPONDENT HAS IMPLEMENTED PROCEDURES, AND A SYSTEM FORAPPLYING PROCEDURES, THAT CAN REASONABLY BE EXPECTED TOPREVENT AND DETECT FAILURES BY RESPONDENT TO PROVIDEAPPROPRIATE BREAKPOINT DISCOUNTS FOR WHICH CUSTOMERS AREELIGIBLE ON PURCHASES OF FRONT-END LOAD MUTUAL FUNDS, BASEDON INFORMATION REASONABLY ASCERTAINABLE BY RESPONDENT.

Regulator Statement RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WITHOUTADMITTING OR DENYING THE FINDINGS, EXCEPT AS TO THE SEC'SJURISDICTION, AND CONSENTED TO THE ENTRY OF THIS ORDER. THE SECFINDS THAT: DURING 2001 AND 2002 (THE "RELEVANT PERIOD"),RESPONDENT SOLD SHARES ISSUED BY MUTUAL FUNDS WITHOUTPROVIDING CERTAIN CUSTOMERS WITH THE REDUCTIONS IN FRONT-ENDLOADS, OR SALES CHARGES, ALSO KNOWN AS "BREAKPOINT"DISCOUNTS, DESCRIBED IN THE PROSPECTUSES OF THE FUNDS.ACCORDING TO DATA SUBMITTED TO NASD BY RESPONDENT,RESPONDENT IS ESTIMATED TO HAVE FAILED TO GIVE CERTAINCUSTOMERS BREAKPOINT DISCOUNTS TOTALING APPROXIMATELY$2,232,805 DURING THE RELEVANT PERIOD. BY FAILING TO DISCLOSE TOCERTAIN CUSTOMERS THAT THEY WERE NOT RECEIVING THE BENEFIT OFAPPLICABLE BREAKPOINT DISCOUNTS, RESPONDENT WILLFULLYVIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT. FURTHER, BECAUSERESPONDENT DID NOT CHARGE THESE CUSTOMERS THE CORRECTSALES LOADS AS SET FORTH IN THE MUTUAL FUNDS' PROSPECTUSES,AND ALSO DID NOT DISCLOSE IN CONFIRMATIONS THE REMUNERATIONRESPONDENT RECEIVED FROM THE SALES LOADS CHARGED TO THESECUSTOMERS, RESPONDENT WILLFULLY VIOLATED RULE 10B-10 UNDERTHE EXCHANGE ACT.




Allegations: SEC ADMINISTRATIVE PROCEEDING RELEASE NOS. 33-8371 AND 34-49232,DATED FEBRUARY 12, 2004: THE SECURITIES AND EXCHANGECOMMISSION ("COMMISSION" OR "SEC") DEEMS IT APPROPRIATE AND INTHE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE ANDCEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTEDPURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933("SECURITIES ACT") AND SECTIONS 15(B)(4) AND 21C OF THE SECURITIESEXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST LINSCO/PRIVATELEDGER CORP. ("RESPONDENT").








Cease and Desist


CENSURE; FINE; AND DISGORGEMENT, PLUS PREJUDGEMENT INTEREST






Resolution:

Other Sanctions Ordered: CEO CERTIFICATION WITHIN 6 MONTHS

Sanction Details: IT IS ORDERED: A. PURSUANT TO SECTION 15(B)(4) OF THE EXCHANGEACT, THAT RESPONDENT IS CENSURED; B. PURSUANT TO SECTION 8A OFTHE SECURITIES ACT AND SECTION 21C OF THE EXCHANGE ACT, THATRESPONDENT SHALL CEASE AND DESIST FROM COMMITTING ORCAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION17(A)(2) OF THE SECURITIES ACT, AND RULE 10B-10 UNDER THEEXCHANGE ACT; C. WITHIN 10 DAYS OF THE ENTRY OF THIS ORDER,RESPONDENT SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF$1,116,402.50 TO THE UNITED STATES TREASURY; D. RESPONDENT SHALLPAY DISGORGEMENT AND PREJUDGMENT INTEREST; AND E. NOT LATERTHAN 6 MONTHS AFTER THE DATE OF THIS ORDER, UNLESS OTHERWISEEXTENDED BY THE SEC FOR GOOD CAUSE SHOWN, RESPONDENT'SCHIEF EXECUTIVE OFFICER SHALL CERTIFY IN WRITING TO THE SEC THATRESPONDENT HAS IMPLEMENTED PROCEDURES, AND A SYSTEM FORAPPLYING PROCEDURES, THAT CAN REASONABLY BE EXPECTED TOPREVENT AND DETECT FAILURES BY RESPONDENT TO PROVIDEAPPROPRIATE BREAKPOINT DISCOUNTS FOR WHICH CUSTOMERS AREELIGIBLE ON PURCHASES OF FRONT-END LOAD MUTUAL FUNDS, BASEDON INFORMATION REASONABLY ASCERTAINABLE BY RESPONDENT.


Order

Disclosure 47 of 54

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Initiated By: NASD







Allegations: NASD CONDUCT RULE 2110 - RESPONDENT MEMBER SOLD SHARESISSUED BY MUTUAL FUNDS WITHOUT PROVIDING CERTAIN CUSTOMERSWITH THE REDUCTION IN THE FRONT-END LOADS, OR SALES CHARGESDESCRIBED IN THE PROSPECTUSES OF THE FUNDS; FAILED TO GIVE ITSCUSTOMERS BREAKPOINT DISCOUNTS IN 35.64% OF ELIGIBLE MUTUALFUND TRANSACTIONS IN 2001 AND 2002, THAT RESULTED IN MISSEDBREAKPOINTS THAT WOULD HAVE REDUCED CUSTOMERS CHARGES BYAT LEAST $2,232,805 ON THEIR PURCHASES OF MUTUAL FUND SHARESWITH FRONT-END LOADS DURING THE RELEVANT PERIOD.

Current Status:


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO/PRIVATELEDGER CORP. CONSENTED TO THE FINDING OF THE ALLEGATIONS ANDTO THE FOLLOWING SANCTIONS: CENSURED AND FINED $2,232,805, OFWHICH ONE HALF SHALL BE PAID TO NASD AND ONE HALF TO U.S.TREASURY PURSUANT TO RELATED SEC PROCEEDINGS BEINGINSTITUTED AGAINST RESPONDENT ON THIS DATE, AND REQUIRED TOPROVIDE WRITTEN NOTIFICATION TO EACH CUSTOMER WHO PURCHASEDFRONT-END LOAD MUTUAL FUNDS THROUGH THE FIRM FROM JANUARY 1,1999 THROUGH NOVEMBER 3, 2003 THAT THE FIRM EXPERIENCED APROBLEM DELIVERING BREAKPOINT DISCOUNTS AND THAT AS A RESULT,THE CUSTOMER MAY BE ENTITLED TO A REFUND; PERFORM ATRADE-BY-TRADE ANALYSIS OF ALL FRONT-END LOAD MUTUAL FUNDPURCHASES OF $2,500 OR MORE AND ALL OVERCHARGES IDENTIFIEDREFUNDED BY MARCH 31, 2004; PROVIDE REFUNDS TO ALL CUSTOMERSWHO DID NOT RECEIVE ALL APPLICABLE BREAKPOINT DISCOUNTS ASDESCRIBED IN NTM 03-47; PROVIDE NASD A REPORT ON RESPONDENT'SPROGRAM BY 4/16/04; AND NOT LATER THAN SIX MONTHS AFTER THEDATE OF THIS ORDER, RESPONDENT'S CHIEF EXECUTIVE OFFICER SHALLCERTIFY IN WRITING TO NASD THAT RESPONDENT HAS IMPLEMENTEDPROCEDURES AND A SYSTEM FOR IDENTIFYING SUCH PROCEDURESTHAT CAN REASONABLY BE EXPECTED TO PREVENT AND DETECTFAILURES TO PROVIDE BREAKPOINT DISCOUNTS FOR WHICHCUSTOMERS ARE ELIGIBLE ON PURCHASES OF FRONT-END LOADMUTUAL FUNDS.


No









PROBLEM DELIVERING BREAKPOINT DISCOUNTS AND THAT AS A RESULT,THE CUSTOMER MAY BE ENTITLED TO A REFUND; PERFORM ATRADE-BY-TRADE ANALYSIS OF ALL FRONT-END LOAD MUTUAL FUNDPURCHASES OF $2,500 OR MORE AND ALL OVERCHARGES IDENTIFIEDREFUNDED BY MARCH 31, 2004; PROVIDE REFUNDS TO ALL CUSTOMERSWHO DID NOT RECEIVE ALL APPLICABLE BREAKPOINT DISCOUNTS ASDESCRIBED IN NTM 03-47; PROVIDE NASD A REPORT ON RESPONDENT'SPROGRAM BY 4/16/04; AND NOT LATER THAN SIX MONTHS AFTER THEDATE OF THIS ORDER, RESPONDENT'S CHIEF EXECUTIVE OFFICER SHALLCERTIFY IN WRITING TO NASD THAT RESPONDENT HAS IMPLEMENTEDPROCEDURES AND A SYSTEM FOR IDENTIFYING SUCH PROCEDURESTHAT CAN REASONABLY BE EXPECTED TO PREVENT AND DETECTFAILURES TO PROVIDE BREAKPOINT DISCOUNTS FOR WHICHCUSTOMERS ARE ELIGIBLE ON PURCHASES OF FRONT-END LOADMUTUAL FUNDS.


Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.




CENSURE, UNDERTAKING





Allegations: NASD CONDUCT RULE 2110 - RESPONDENT MEMBER SOLD SHARESISSUED BY MUTUAL FUNDS WITHOUT PROVIDING CERTAIN CUSTOMERSWITH THE REDUCTION IN THE FRONT-END LOADS, OR SALES CHARGESDESCRIBED IN THE PROSPECTUSES OF THE FUNDS; FAILED TO GIVE ITSCUSTOMERS BREAKPOINT DISCOUNTS IN 35.64% OF ELIGIBLE MUTUALFUND TRANSACTIONS IN 2001 AND 2002, THAT RESULTED IN MISSEDBREAKPOINTS THAT WOULD HAVE REDUCED CUSTOMERS CHARGES BYAPPROXIMATELY $2,232,805 ON THEIR PURCHASES OF MUTUAL FUNDSHARES WITH FRONT-END LOADS DURING THE RELEVANT PERIOD.



Resolution: Acceptance, Waiver & Consent(AWC)







Resolution Date:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LINSCO/PRIVATELEDGER CORP. CONSENTED TO THE FINDING OF THE ALLEGATIONS ANDTO THE FOLLOWING SANCTIONS: CENSURED AND FINED $2,232,805, OFWHICH ONE HALF SHALL BE PAID TO NASD AND ONE HALF TO U.S.TREASURY PURSUANT TO RELATED SEC PROCEEDINGS BEINGINSTITUTED AGAINST RESPONDENT ON THIS DATE, AND REQUIRED TOPROVIDE WRITTEN NOTIFICATION TO EACH CUSTOMER WHO PURCHASEDFRONT-END LOAD MUTUAL FUNDS THROUGH THE FIRM FROM JANUARY 1,1999 THROUGH NOVEMBER 3, 2003 THAT THE FIRM EXPERIENCED APROBLEM DELIVERING BREAKPOINT DISCOUNTS AND THAT AS A RESULT,THE CUSTOMER MAY BE ENTITLED TO A REFUND; PERFORM ATRADE-BY-TRADE ANALYSIS OF ALL FRONT-END LOAD MUTUAL FUNDPURCHASES OF $2,500 OR MORE AND ALL OVERCHARGES IDENTIFIEDREFUNDED BY MARCH 31, 2004; PROVIDE REFUNDS TO ALL CUSTOMERSWHO DID NOT RECEIVE ALL APPLICABLE BREAKPOINT DISCOUNTS ASDESCRIBED IN NTM 03-47; PROVIDE NASD A REPORT ON RESPONDENT'SPROGRAM BY 4/16/04; AND NOT LATER THAN SIX MONTHS AFTER THEDATE OF THIS ORDER, RESPONDENT'S CHIEF EXECUTIVE OFFICER ORANOTHER SENIOR EXEUCTIVE OFFICER SHALL CERTIFY IN WRITING TONASD THAT RESPONDENT HAS IMPLEMENTED PROCEDURES AND ASYSTEM FOR IDNETIFYING SUCH PROCEDURES THAT CAN REASONABLYBE EXPECTED TO PREVENT AND DETECT FAILURES TO PROVIDEBREAKPOINT DISCOUNTS FOR WHICH CUSTOMERS ARE ELIGIBLE ONPURCHASES OF FRONT-END LOAD MUTUAL FUNDS.


Disclosure 48 of 54

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Docket/Case Number: CMS030072

Allegations: NASD CONDUCT RULE 2110 AND MARKETPLACE RULE 6240(A)(2)-RESPONDENT MEMEBER LINSCO/PRIVATE LEDGER CORP. FAILED TOREPORT TO FIXED INCOME PRICING SYSTEM ("FIPS") TRANSACTIONS INFIPS SECURITIES WITHIN FIVE MINUTES AFTER EXECUTION. THESE LATETRANSACTIONS CONSTITUTED APPROXIMATELY 96 PERCENT OF ALLTRANSACTIONS IN FIPS SECURITIES THAT THE FIRM WAS OBLIGATED TOREPORT TO FIPS DURING THE REVIEW PERIOD.












Other Product Type(s): UNSPECIFIED TYPE OF FINANCIAL PRODUCT.


Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENTLINSCO/PRIVATE LEDGER CORP. CONSENTED TO THE FINDING OF THEALLEGATIONS AND TO THE FOLLOWING SANCTIONS: FINED $5,000.






Other


ACCEPTANCE, WAIVER & CONSENT (AWC)




Other Product Type(s): FIXED INCOME SECURITY

Allegations: FAILURE TO REPORT TO FIPS 23 TRANSACTIONS IN FIPS SECURITIESWITHIN FIVE MINUTES AFTER EXECUTION.



Resolution:












Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS. THEREFORE, THE FIRM WAS FINED $5,000.

Firm Statement MATTER AROSE FROM AN ERROR IN REPORTING 23 TRANSACTIONS INFIPS SECURITIES WITHIN FIVE MINUTES AFTER EXECUTION.

Disclosure 49 of 54

i









Allegations: NASD CONDUCT RULES 2110 AND 3010 - RESPONDENT MEMBER'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS CONCERNINGCOMMUNICATIONS WITH THE PUBLIC VIA ELECTRONIC MEDIA.



Resolution:

Other Sanctions Ordered: UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM IS FINED $5,000 AND SHALL UNDERTAKETO REVISE IT'S WRITTEN SUPERVISORY PROCEDURES CONCERNINGCOMMUNICATIONS WITH THE PUBLIC VIA ELECTRONIC MEDIA.












Other


ACCEPTANCE, WAIVER & CONSENT (AWC)





Allegations: NASD CONDUCT RULES 2110 AND 3010 - RESPONDENT MEMBER'SSUPERVISORY SYSTEM DID NOT PROVIDE FOR SUPERVISIONREASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH RESPECT TOTHE APPLICABLE SECURITIES LAWS AND REGULATIONS CONCERNINGCOMMUNICATIONS WITH THE PUBLIC VIA ELECTRONIC MEDIA.



Resolution:

Other Sanctions Ordered: UNDERTAKING TO REVISE THE FIRM'S WRITTEN SUPERVISORYPROCEDURES.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRMCONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OFFINDINGS, THEREFORE, THE FIRM WAS FINED $5000 AND SHALLUNDERTOOK TO REVISE ITS WRITTEN SUPERVISORY PROCEDURESCONCERNING COMMUNICATIONS WITH THE PUBLIC VIA ELECTRONICMEDIA.

Firm Statement MATTER AROSE OUT OF REPRESENTATIVE'S UNAUTHORIZEDPARTICIPATION/POSTINGS ON ELECTRONIC BULLETIN BOARDS.



Disclosure 50 of 54

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Allegations: THE STATE OF GEORGIA CITED PLFS FOR VIOLATION OF O.C.G.A.10-5-12-(A)(1) OF THE ACT, ALLEGING THAT PLFS OFFERED FOR SALE ANDSOLD SECURITIES WHICH WERE NOT EFFECTIVELY REGISTERED OREXEMPT FROM REGISTRATION.








Initiated By: GEORGIA COMMISSIONER OF SECURITIES


Other


ORDER OF SETTLEMENT


Docket/Case Number: 50-86-9529(A)


Other Product Type(s): PRIVATE LEDGER FINANCIAL SERVIES (PLFS) AGREED TO REIMBURSE THECOMMISSIONER IN THE AMOUNT OF $1,000.00.

Allegations: THE STATE OF GEORGIA CITED PLFS FOR VIOLATION OF O.C.G.A.10-5-12-(A)(1) OF THE ACT, ALLEGING THAT PLFS OFFERED FOR SALE ANDSOLD SECURITIES WHICH WERE NOT EFFECTIVELY REGISTERED OREXEMPT FROM REGISTRATION.


Resolution:

Other Sanctions Ordered: PRIVATE LEDGER FINANCIAL SERVICES AGREED TO REIMBURSE THECOMMISSIONER IN THE AMOUNT OF $1,000.00 AND AGREED TO CEASEAND DESIST FROM VIOLATING O.C.G.A. 10-5-12(A)(1).

Sanction Details: REIMBURSED THE COMMISSIONER $1,000.00

Firm Statement ON MAY 14, 1986 PLFS CONSENTED TO THE ENTRY OF AN ORDER OFSETTLEMENT IN THE STATE OF GEORGIA. THE STATE OF GEORGIA CITEDPLFS FOR VIOLATION OF O.C.G.A. 10-5-12(A)(1) OF THE ACT, ALLEGINGTHAT PLFS OFFERED FOR SALE AND AOLD SECURITIES WHICH WERE NOTEFFECTIVELY REGISTERED NOR EXEMPT FROM REGISTRATION. PLFSREIMBURSED THE COMMISSIONER IN THE AMOUNT OF $1,000 ANDAGREED TO CEASE AND DESIST WITHOUT ADMITTING OR DENYING ANYOF THE FINDINGS OF FACT OF CONCLUSIONS OF LAW. STATE OFGEORGIA NO 50-86-9529(A).

Sanctions Ordered: Cease and Desist/Injunction

Order

Disclosure 51 of 54

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Allegations: A NOTICE OF INTENT TO INVOKE ADMINISTRATIVESANCTIONS WAS FILED ON MAY 28, 1997. THE ACTION WAS IN REGARDTO RESPONDENT'S ALLEDGED FAILURE TO ADEQUATELY SUPERVISEMARK SIGURDSON.PURSUANT TO A CONSENT ORDER, RESPONDENT AGREED TO OFFERPARTIAL RESTITUTIONTO FOUR CUSTOMERS IN THE AMOUNT OF $39,644.








Initiated By: KANSAS SECURITIES COMMISSIONER




Docket/Case Number: 95-2984/97E179



Other Product Type(s): NON SPECIFIC SECURITY

Allegations:SANCTIONS WAS FILED ON MAY 28, 1997. THE ACTION WAS IN REGARDTO RESPONDENT'S ALLEDGED FAILURE TO ADEQUATELY SUPERVISEMARK SIGURDSON.PURSUANT TO A CONSENT ORDER, RESPONDENT AGREED TO OFFERPARTIAL RESTITUTIONTO FOUR CUSTOMERS IN THE AMOUNT OF $39,644.


Resolution:


Sanction Details: NOT PROVIDED

Regulator Statement CONTACT: DAVE RUHNKE; 785-296-3307

Sanctions Ordered: Disgorgement/Restitution

Consent


Initiated By: KANSAS SECURITIES COMMISSION


Other


Docket/Case Number: 97E179



Allegations: 1) FAILURE TO SUPERVISE A SALES AGENT2) FILING A MATERIALLY FALSE REPORT (FORM U-5)










Other


PRINCIPAL SANCTION - ORDER.


Resolution:

Other Sanctions Ordered: LPL ENTERED INTO A STIPULATION FOR CONSENT ORDER THATRESOLVED THIS MATTER WITHOUT PAYMENT OF A FINE OR CENSURE. LPLAGREED TO REVIEW CERTAIN OF ITS PROCEDURES AND TO MAKE ANYMODIFICATIONS THAT LPL DETERMINES TO BE REASONABLE & NOTOVERLY BURDENDSOME. LPL ALSO AGREED TO OFFER PARTIALRESTITUTION TO CERTAIN CUSTOMER OF LPL'S FORMER REP.RESTITUTION WAS LESS THAN $40,000.00.

Sanction Details: LPL ENTERED INTO STIPULATION FOR CONSENT ORDER THAT RESOLVEDTHIS MATTER WITHOUT PAYMENT OF A FINE OR CENSURE. RESTITUTIONWAS LESS THAN $40,000.00.

Firm Statement CLOSED

Sanctions Ordered: Disgorgement/Restitution

Order

Disclosure 52 of 54

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Initiated By: PENNSYLVANIA SECURITIES COMMISSION




Docket/Case Number: 9501-04LC


Principal Product Type:


Allegations: VIOLATIONS OF SECTIONS 305(a)(vii) & (ix) OFTHE PENNSYLVANIA SECURITIES ACT.


Resolution: Order138©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.







Resolution:


Sanction Details: THE COMMISSION ORDERED LINSCO PRIVATE LEDGER TOENGAGE AN INDEPENDENT CONSULTANT, ACCEPTABLE TO COMMISSIONSTAFF, TO CONDUCT A REVIEW OF EXISTING PROCEDURES, PRACTICESAND POLICIES CONCERNING THEIR PENNSYLVANIA OFFICE AND THEIRSUPERVISION OF ITS PENNSYLVANIA OPERATIONS; ORDERED LINSCOPRIVATE LEDGER TO PAY $19,304.94 IN COSTS AND TO COMPLY WITHTHE PENNSYLVANIA SECURITIES ACT IN THE FUTURE.

Regulator Statement LINSCO PRIVATE LEDGER FAILED TO MAINTAIN ANDENFORCE CERTAIN OF THEIR WRITTEN PROCEDURES. ALSO THATLINSCOPRIVATE LEDGER'S REGISTERED REPRESENTATIVE RECOMMENDED TOTWOCUSTOMERS, THE PURCHASE, SALE OR EXCHANGE OF SECURITIESWITHOUTREASONABLE GROUNDS TO BELIEVE THAT THEY WERE SUITABLE FORTHECUSTOMERS. FURTHER, THAT LINSCO PRIVATE LEDGER FAILED TOEXERCISE DILIGENT SUPERVISION OVER THE SECURITIES ACTIVITIES OFONE OF ITS REGISTERED REPRESENTATIVES. CONTACT: TRACY L.WRIGHT(717) 783-5177

Sanctions Ordered:

Order


Allegations: PROCEEDING WAS BASED ON CONDUCT OF AN AGENT FORMERLYLICENSED WITH LPL AND ONE OF ITS PREDECESSOR FIRMS, PRIVATELEDGER FINANCIAL SERVICES (PLFS). THE PSC FOUND THAT:1)THEAGENT ACTED AS THE MANAGER OF A PLFS BRANCH OFFICE FROMNOVEMBER 1987 TO OCTOBER 1988 WITHOUT THE APPROPRIATESECURITIES LICENSE; 2)LPL WAS UNABLE IN 1994 TO PRODUCE THEFOLLOWING: A NEW ACCOUNT FORM FOR ONE CUSTOMER, A COMPLETENEW ACCOUNT FORM FOR ANOTHER CUSTOMER, A CHRONOLOGICALLISTING OF INVESTMENTS FOR ALL THE AGENT'S CUSTOMER, ANDSUBSCRIPTION AGREEMENTS FOR TWO LIMITED PARTNERSHIPTRANSACTIONS EFFECTED BY THE AGENT;AND 3)THE AGENT SOLD TOTWO CUSTOMERS INTERESTS IN APPROXIMATELY 13 AND 19 LIMITEDPARTNER SHIPS, RESPECTIVELY, WITHOUT A RESONABLE BASIS FORBELIEVING THAT THE TRANSACTIONS WERE SUITABLE FOR THECUSTOMERS.







Initiated By: PENNSYLVANIA SECURITIES COMMISSION "PSC"


Other


PRINICPAL SANCTION WAS AN ORDER. LPL CONSENTED TO ENTRY OF ANORDER REQUIRING IT TO ENGAGE AN INDEPENDENT CONSULTANT TOREVEIW ITS EXISTING COMPLIANCE POLICIES AND PROCEDURES, PAYINVESTIGATIVE COSTS OF $19,304.94, AND COMPLY WITH THEPROVISIONS OF THE PENNSYLVANIA SECURITIES ACT OF 1972 ANDRELATED REGULATIONS.


Docket/Case Number: 9501-04LC

Principal Product Type: Direct Investment(s) - DPP & LP Interest(s)


PARTNER SHIPS, RESPECTIVELY, WITHOUT A RESONABLE BASIS FORBELIEVING THAT THE TRANSACTIONS WERE SUITABLE FOR THECUSTOMERS.


Resolution:

Other Sanctions Ordered: NO SANCTION. FIRM AGREED TO PAY INVESTIGATIVE COSTS OF$19304.94.

Sanction Details: NO SANCTION. FIRM AGREED TO PAY INVESTIGATIVE COSTS OF$19304.94.

Firm Statement CLOSED

Sanctions Ordered:

Order

Disclosure 53 of 54

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Initiated By: MICHIGAN


Docket/Case Number: 82-66-S



Allegations:














Resolution:


Sanction Details:

Regulator Statement THE RESPONDENT EMPLOYED UNREGISTERED AGENTS WHICH IS AVIOLATION OF SECTION 201(b)OF THE ACT. THE AGENTS WHILE IN THEEMPLOY AND ON BEHALF OF THE RESPONDENT, MADE OFFERS ANDSALESOF VARIOUS SECURITIES. PURSUANT TO SECTION 204(A)OF THE ACT,THE RESPONDENT BE HEREBY CENSURED. CASE #82-66-S

Sanctions Ordered: Censure

Decision


Initiated By: MICHIGAN CORPORATIONS AND SECURITIES BUREAU


Censure


RESTITUTION OF $11,163.00.


Docket/Case Number: 82-66-S


Other Product Type(s): LICENSING MATTER

Allegations: BUREAU ALLEGED THAT TWO AGENTS OF PRIVATE LEDGER FINANCIALSERVICES (PLFS)OFERED FOR SALE AND SOLD SECURITIES THAT WERENOT EFFECTIVELY REGISTERED OR EXEMPT FROM REGISTRATION.



Resolution: Consent








Other Sanctions Ordered: NO SANCTION RESTITUTION OF 11,163.00 WAS PAID

Sanction Details: NO SANCTION RESTITUTION OF 11,163.00 WAS PAID

Firm Statement PRIVATE LEDGER FINANCIAL SERVICES INC. (PLFS) WAS CENSURED BYMICHIGAN CORPORATIONS AND SECURITIES BUREAU AND ORDERED TOPAY RESTITUTION OF 11,163.00 TO MICHIGAN CLIENT. CLIENT WAS SOLDVARIOUS SECURITIES BY TWO PLFS AGENTS WHO WERE NOT AT THE TIMEOF SALE REGISTERED IN MICHIGAN, A VIOLATION OF SECTION 201(B) OFTHE MICHIGAN SECURITIES ACT. BOTH AGENTS WERE TERMINATED FROMPLFS. MICHIGAN CASE 82-66-S, DATED MAY 20, 1984.


Disclosure 54 of 54

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Docket/Case Number: CA-793



Allegations:



Resolution:


Sanction Details:

Regulator Statement COMPLAINT #CA-793 FILED 02/14/80DIST. #2NDECISION 06/04/80: CENSURED; FINED $500 AND ASSESSED COSTSOF $252.10 ONE-HALF EACH07/18/80: TO BE FINALFINES & COSTS 01/14/81 FC#7822 PDAPPEAL ACTION 06/17/80: APPEALED TO B/G


Decision







Regulator StatementDIST. #2NDECISION 06/04/80: CENSURED; FINED $500 AND ASSESSED COSTSOF $252.10 ONE-HALF EACH07/18/80: TO BE FINALFINES & COSTS 01/14/81 FC#7822 PDAPPEAL ACTION 06/17/80: APPEALED TO B/G


Initiated By: NASD DISTRICT BUSINESS CONDUCT COMMITTEE


Censure


FINE OF $500.00


Docket/Case Number: CA-793


Other Product Type(s): ADVERTISEMENT

Allegations: NASD ALLEGED THAT PRIVATE LEDGER FINANCIAL SERVICES (PLFS)FAILED TO SUPERVISE A BRANCH OFFICE WITH REPSECT TO USE OFSTATIONARY AND BUSINESS CARDS AND FOR THE FAILURE TO USE PLFS'SNAME ON THE FRONT DOOR OF THE BRANCH OFFICE AND INA PHONE BOOK LISTING.



Resolution:

Other Sanctions Ordered: NONE

Sanction Details: NO SANCTION A $500 FINE

Firm Statement ON JUNE 4, 1980 THE NASD DISTRICT BUSINESS CONDUCT COMMITTEECENSURED AND FINED PLFS $500 FOR FAILURE TO SUPERVISE A BRANCHOFFICE WITH RESPECT TO THE USE OF STATIONARY AND BUSINESSCARDS AND FOR FAILURE TO USE THE NAME OF PLFS ON THE FRONTDOOR OF THE BRANCH OFFICE AND IN THE PHONE BOOK LISTING.


Consent







Regulatory - Pending

This type of disclosure event may include a pending formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulatory agency such as the Securities and ExchangeCommission, foreign financial regulatory body) for alleged violations of investment-related rules or regulations.

Disclosure 1 of 1


Initiated By: STATE OF NEW HAMPSHIRE BUREAU OF SECURITIES REGULATION


Other


N/A


Docket/Case Number: C-2013-000005


Other Product Type(s): NON-TRADED REITS

Allegations: THE STATE OF NEW HAMPSHIRE BUREAU OF SECURITIES REGULATIONCOMMENCED AN ADJUDICATIVE PROCEEDING BASED ON ALLEGATIONSOF INADEQUATE SUPERVISION OF NON-TRADED REIT SALES.

Current Status: Pending







Arbitration Award - Award/Judgment

Brokerage firms are not required to report arbitration claims filed against them by customers; however, BrokerCheckprovides summary information regarding FINRA arbitration awards involving securities and commodities disputesbetween public customers and registered securities firms in this section of the report. The full text of arbitration awards issued by FINRA is available at www.finra.org/awardsonline.

Disclosure 1 of 50


Type of Event: ARBITRATION

Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

Disputed Product Type:

Sum of All Relief Requested:

Disposition:

Disposition Date:

Sum of All Relief Awarded:

NASD

05/03/2000

00-01420

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK

$490,000.00

AWARD AGAINST PARTY

06/14/2001

$448,939.00

There may be a non-monetary award associated with this arbitration.Please select the Case Number above to view more detailed information.

Disclosure 2 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

08/31/2000

00-03725

ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-ERRORS-CHARGES; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK145©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.




http://finraawardsonline.finra.org/Search.aspx?CaseNum=00-01420





Disposition:

Disposition Date:


COMMON STOCK

$1,500,000.00

AWARD AGAINST PARTY

03/22/2002

$2,500.00


Disclosure 3 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/15/2001

01-05344

ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

UNKNOWN TYPE OF SECURITIES

$330,441.00

AWARD AGAINST PARTY

12/11/2002

$389,428.00


Disclosure 4 of 50

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Arbitration Forum:

Case Initiated:

Allegations:

NASD

11/07/2001

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZED TRADING;ACCOUNT RELATED-NEGLIGENCE







Case Initiated:

Case Number:



Disposition:

Disposition Date:


11/07/2001

01-05749


$316,839.00

AWARD AGAINST PARTY

02/26/2003

$324,774.00


Disclosure 5 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

12/06/2001

01-05880

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK; MUTUAL FUNDS

$900,000.00

AWARD AGAINST PARTY

03/11/2003

$395,468.01


Disclosure 6 of 50

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Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TO SUPERVISE;ACCOUNT RELATED-NEGLIGENCE 147©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.







Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

12/20/2001

01-06809

ACCOUNT RELATED-NEGLIGENCE

COMMON STOCK

$75,981.00

AWARD AGAINST PARTY

12/23/2002

$140,519.00


Disclosure 7 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

11/26/2002

02-06895

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE

ANNUITIES; MUTUAL FUNDS

$700,000.00

AWARD AGAINST PARTY

11/21/2003

$237,687.51


Disclosure 8 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

01/17/2003

03-00265



$242,907.00

AWARD AGAINST PARTY

05/24/2004

$44,800.01


Disclosure 9 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/22/2003

03-02949

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

COMMON STOCK; LIMITED PARTNERSHIPS; MUTUAL FUNDS

$2,050,000.00

AWARD AGAINST PARTY

12/23/2004

$208,000.00









Disclosure 10 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

06/02/2003

03-03366

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-NEGLIGENCE


$326,993.65

AWARD AGAINST PARTY

05/21/2004

$20,375.00


Disclosure 11 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

09/29/2003

03-05803


OTHER TYPES OF SECURITIES

$5,907,083.00

AWARD AGAINST PARTY

05/26/2005

$289,636.00150©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.







Sum of All Relief Awarded: $289,636.00


Disclosure 12 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

01/03/2004

03-09127

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-OTHER; ACCOUNT RELATED-BREACH OFCONTRACT


$107,200.00

AWARD AGAINST PARTY

02/17/2005

$371,938.03


Disclosure 13 of 50

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Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

NASD

03/30/2004

04-02078

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-MARGIN CALLS


$252,876.00

AWARD AGAINST PARTY 151©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.







Disposition:

Disposition Date:


AWARD AGAINST PARTY

02/24/2005

$115,000.00


Disclosure 14 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/28/2004

04-07182

ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; ACCOUNTRELATED-OTHER

COMMON STOCK

$20,000.00

AWARD AGAINST PARTY

03/08/2005

$25,425.01


Disclosure 15 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


NASD

11/10/2004

04-07713


ANNUITIES; GOVERNMENT SECURITIES; MUNICIPAL BONDS; MUTUALFUNDS










Disposition:

Disposition Date:


ANNUITIES; GOVERNMENT SECURITIES; MUNICIPAL BONDS; MUTUALFUNDS

$1,500,000.00

AWARD AGAINST PARTY

12/27/2005

$1,344,049.00


Disclosure 16 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

01/27/2005

04-08505

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TOSUPERVISE

ANNUITIES; MUTUAL FUNDS; OTHER TYPES OF SECURITIES

$2,798,229.66

AWARD AGAINST PARTY

03/23/2006

$211,621.01


Disclosure 17 of 50

i



Arbitration Forum:

Case Initiated:

Allegations:

NASD

05/26/2005

ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE







Case Initiated:

Case Number:



Disposition:

Disposition Date:


05/26/2005

05-02716

COMMON STOCK

$100,000.00

AWARD AGAINST PARTY

02/15/2006

$15,000.00


Disclosure 18 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

08/03/2005

05-03949

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT RELATED-NEGLIGENCE

ANNUITIES

$210,000.00

AWARD AGAINST PARTY

06/27/2006

$45,000.01


Disclosure 19 of 50

i



Allegations: ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

04/28/2006

06-01705

ANNUITIES

$20,000.00

AWARD AGAINST PARTY

10/13/2006

$212.50


Disclosure 20 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

08/29/2006

06-03110

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-TRANSFER

ANNUITIES

$46,373.00

AWARD AGAINST PARTY

04/04/2007

$11,990.01


Disclosure 21 of 50

i



Allegations: UNKNOWN TYPE OF CONTROVERSIES 155©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.







Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

09/27/2007

07-02717

UNKNOWN TYPE OF CONTROVERSIES


$4,230,000.00

AWARD AGAINST PARTY

11/20/2008

$1,300,000.00


Disclosure 22 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

06/18/2009

09-02735

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-OMISSION OF FACTS; ACCOUNT RELATED-NEGLIGENCE

ANNUITIES

$8,293.44

AWARD AGAINST PARTY

01/19/2010

$8,455.94


Disclosure 23 of 50

i










Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

09/03/2009

09-04708

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT RELATED-ERRORS-CHARGES; ACCOUNTRELATED-FAILURE TO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

MUTUAL FUNDS

$7,731.96

AWARD AGAINST PARTY

02/04/2010

$162.50


Disclosure 24 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

09/28/2009

09-05197

ACCOUNT RELATED-TRANSFER

MUTUAL FUNDS

$25,000.00

AWARD AGAINST PARTY

04/12/2010

$212.50


Disclosure 25 of 50

i










Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

10/29/2009

09-05512

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE; EXECUTIONS-FAILURE TOEXECUTE

COMMON STOCK

Unspecified Damages

AWARD AGAINST PARTY

07/13/2010

$87,255.00


Disclosure 26 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

01/14/2010

09-06815

ACCOUNT ACTIVITY-MANIPULATION; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURE TOSUPERVISE

ANNUITIES

$28,893.89

AWARD AGAINST PARTY

09/24/2010

$20,808.60

There may be a non-monetary award associated with this arbitration.








Please select the Case Number above to view more detailed information.

Disclosure 27 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

01/08/2010

09-06873

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-BREACHOF CONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE; EXECUTIONS-FAILURE TO EXECUTE

MUTUAL FUNDS

$1,470.00

AWARD AGAINST PARTY

07/30/2010

$1,431.93


Disclosure 28 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:

FINRA

01/25/2010

09-07168

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-NEGLIGENCE

VARIABLE ANNUITIES

$21,145.00

AWARD AGAINST PARTY

07/20/2010








Sum of All Relief Awarded: $212.50


Disclosure 29 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

02/01/2011

11-00347

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT ACTIVITY-OTHER;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

$8,000,000.00

AWARD AGAINST PARTY

02/10/2012

$1,367,000.00


Disclosure 30 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



FINRA

04/06/2011

11-01036

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

OTHER TYPES OF SECURITIES; REAL ESTATE INVESTMENT TRUST

$150,000.00160©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.








Disposition:

Disposition Date:


$150,000.00

AWARD AGAINST PARTY

06/06/2012

$141,250.00


Disclosure 31 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

07/20/2011

11-02607

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNTRELATED-NEGLIGENCE

COMMON STOCK; MUTUAL FUNDS

$35,972.07

AWARD AGAINST PARTY

03/08/2012

$5,575.00


Disclosure 32 of 50

i



Arbitration Forum:

Allegations:

FINRA

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING; ACCOUNT RELATED-NEGLIGENCE







Case Initiated:

Case Number:



Disposition:

Disposition Date:


04/04/2012

12-01189

COMMON STOCK; CORPORATE BONDS; MUNICIPAL BONDS; MUTUALFUNDS

$24,450.00

AWARD AGAINST PARTY

10/25/2012

$212.50


Disclosure 33 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

05/08/2012

12-01432

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE

VARIABLE ANNUITIES

$25,000.00

AWARD AGAINST PARTY

12/14/2012

$212.50


Disclosure 34 of 50

i



Allegations: ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

10/11/2012

12-03541

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT RELATED-BREACH OFCONTRACT; ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE

VARIABLE ANNUITIES

$13,625.82

AWARD AGAINST PARTY

04/09/2013

$212.50


Disclosure 35 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

11/15/2012

12-03853

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-OTHER; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNTRELATED-BREACH OF CONTRACT; ACCOUNT RELATED-FAILURE TOSUPERVISE; ACCOUNT RELATED-NEGLIGENCE

MUTUAL FUNDS; VARIABLE ANNUITIES

$350,000.00

AWARD AGAINST PARTY

04/07/2015

$95,375.01









Disclosure 36 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

02/28/2013

13-00349

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE; ACCOUNTRELATED-NEGLIGENCE


$93,497.56

AWARD AGAINST PARTY

02/28/2014

$300.00


Disclosure 37 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:

FINRA

07/31/2014

14-01594


ANNUITIES

$26,000.00

AWARD AGAINST PARTY

01/14/2015








Disposition Date:


01/14/2015

$600.00


Disclosure 38 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


FINRA

07/10/2014

14-02053

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSION OF FACTS;ACCOUNT ACTIVITY-SUITABILITY

REAL ESTATE INVESTMENT TRUST

$25,000.00

AWARD AGAINST PARTY

04/06/2015

$6,630.59


Disclosure 39 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:


FINRA

07/17/2014

14-02097

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER; ACCOUNTACTIVITY-SUITABILITY; ACCOUNT RELATED-BREACH OF CONTRACT;ACCOUNT RELATED-NEGLIGENCE

OTHER TYPES OF SECURITIES165©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.









Disposition:

Disposition Date:



$3,800,000.01

AWARD AGAINST PARTY

06/09/2015

$725,000.00


Disclosure 40 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

05/04/1988

88-01184

$124,452.00

AWARD AGAINST PARTY

09/27/1990

$18,012.50


Disclosure 41 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:

NASD

01/01/1988

88-03298

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION;ACCOUNT ACTIVITY-SUITABILITY








Case Number:



Disposition:

Disposition Date:


88-03298


$20,000.00

AWARD AGAINST PARTY

12/19/1989

$30,540.00


Disclosure 42 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/25/1991

91-03118

ACCOUNT ACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OMISSIONOF FACTS; ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-FAILURETO SUPERVISE

LIMITED PARTNERSHIPS

$53,675.00

AWARD AGAINST PARTY

10/27/1992

$45,224.00


Disclosure 43 of 50

i



Arbitration Forum:

Allegations:

NASD

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-CHURNING; ACCOUNT ACTIVITY-MISREPRESENTATION;ACCOUNT RELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

10/28/1991

91-03204

LIMITED PARTNERSHIPS; OPTIONS; REAL ESTATE INVESTMENT TRUST

$200,000.00

AWARD AGAINST PARTY

10/07/1992

$94,768.00


Disclosure 44 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

12/12/1991

91-03796

ACCOUNT ACTIVITY-CHURNING; ACCOUNT ACTIVITY-UNAUTHORIZEDTRADING

COMMON STOCK; WARRANTS/RIGHTS

$10,000.00

AWARD AGAINST PARTY

04/20/1992

$8,925.00


Disclosure 45 of 50

i



Allegations: ACCOUNT ACTIVITY-SUITABILITY; ACCOUNT RELATED-NEGLIGENCE








Arbitration Forum:

Case Initiated:

Case Number:



Disposition:

Disposition Date:


NASD

10/19/1992

92-03340

LIMITED PARTNERSHIPS; REAL ESTATE INVESTMENT TRUST

$65,810.68

AWARD AGAINST PARTY

11/17/1993

$24,320.00


Disclosure 46 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

03/30/1994

94-00837

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-OTHER; ACCOUNTACTIVITY-SUITABILITY

COMMON STOCK; LIMITED PARTNERSHIPS; REAL ESTATE INVESTMENTTRUST

$29,894.24

AWARD AGAINST PARTY

03/02/1995

$23,494.24


Disclosure 47 of 50

i










Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

12/08/1994

94-03891

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION; ACCOUNT ACTIVITY-SUITABILITY;ACCOUNT RELATED-FAILURE TO SUPERVISE


$20,000.00

AWARD AGAINST PARTY

12/28/1995

$10,000.00


Disclosure 48 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

08/31/1995

95-04120

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNTACTIVITY-MISREPRESENTATION

COMMON STOCK; OTHER TYPES OF SECURITIES

$8,459.08

AWARD AGAINST PARTY

02/27/1996

$6,028.57


Disclosure 49 of 50

i








Disclosure 49 of 50



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

10/09/1995

95-04702

ACCOUNT ACTIVITY-OMISSION OF FACTS; ACCOUNT ACTIVITY-SUITABILITY

MUTUAL FUNDS

$12,267.00

AWARD AGAINST PARTY

05/15/1996

$7,027.00


Disclosure 50 of 50

i



Arbitration Forum:

Case Initiated:

Case Number:

Allegations:



Disposition:

Disposition Date:


NASD

09/30/1997

97-03730

ACCOUNT ACTIVITY-BRCH OF FIDUCIARY DT; ACCOUNT RELATED-FAILURETO SUPERVISE; ACCOUNT RELATED-NEGLIGENCE


$326,350.00

AWARD AGAINST PARTY

03/03/1999

$148,500.00









Civil Bond

This type of disclosure event involves a civil bond for the brokerage firm that has been denied, paid, or revoked by abonding company.

Disclosure 1 of 4


Policy Holder: LPL FINANCIAL LLC

Bonding Company Name: MENDES & MOUNT, LLP

Disposition: Payout

Disposition Date: 06/05/2014

Payout Details: PAYOUT AMOUNT: $1,409,410.61. DATE PAID: 06/05/2014.

Firm Statement INDEMNIFICATION PAYMENTS RECEIVED FROM FIDELITY BOND CARRIER.CLAIMS ARISING FROM PAYMENTS MADE BY INDIVIDUALS TO FORMERBROKER.

Disclosure 2 of 4

i



Bonding Company Name: FEDERAL INSURANCE COMPANY

Disposition: Payout


Payout Details: PAYMENTS TOTALING $1,279,433.79. DATES OF PAYMENTS: AUGUST 31,2009 - $1,080,233.79; JULY 20, 2010 - $14,000 AND; NOVEMBER 2, 2011 -$185,200.

Firm Statement INDEMNIFICATION PAYMENTS RECEIVED FROM FIDELITY BOND CARRIER.CLAIMS ARISING FROM PAYMENTS MADE BY INDIVIDUALS TO FORMERBROKER.

Disclosure 3 of 4

i



Bonding Company Name: CHUBB - FEDERAL INSURANCE CO.

Disposition: Payout

Disposition Date: 10/18/2011172©2015 FINRA. All rights reserved. Report# 56910-64536 about LPL FINANCIAL LLC. Data current as of Tuesday, September 15, 2015.






Payout Details: $2,000,000 PAID 10/18/2011.

Firm Statement ISSUE RELATED TO NON-PAYMENT OF FUNDS LOANED TO FORMERBROKER.

Disclosure 4 of 4

i


Policy Holder: LINSCO / PRIVATE LEDGER CORP.

Bonding Company Name: ZURICH

Disposition: Payout


Payout Details: PAID OUT $50,000 ON JULY 27,2007.

Firm Statement CLAIM OF MISAPROPRIATION OF FUNDS BY FORMER REGISTEREDREPRESENTATIVE.






End of Report

This page is intentionally left blank.





Documents

LPL FINANCIAL LLC · LPL FINANCIAL LLC Report #56910-64536, data current as of Tuesday, September 15, 2015. Section Title Report Summary Firm History CRD# 6413 1 11 Firm Profile 2