SEC accuses LPL Financial of anti-money laundering violations in La Jolla

SEC accuses LPL Financial, a La Jolla-based financial services firm, of failing to comply with anti-money laundering policies and will pay an $18 million civil penalty to resolve the charges. The violations were related to the company’s customer identification program from May 2019 through December 2023, where accounts were not closed in a timely manner for customers with unverified identities and prohibited high-risk customers, such as cannabis-related and foreign accounts, were not eliminated.

Associate director of the SEC’s Division of Enforcement, Stacy Bogert, emphasized the importance of broker-dealers like LPL complying with anti-money laundering obligations. According to Bogert, these obligations are crucial for maintaining the integrity of the securities markets and preventing illicit financial activity. The SEC order calls for a compliance consultant to review and suggest changes to the firm’s practices, with LPL agreeing to pay the penalty and implement necessary improvements without admitting or denying the SEC’s findings.

While LPL Financial did not respond to requests for comment, the company states on its website that it is the largest independent broker-dealer in the nation, specializing in financial adviser services and revenue generation from fees and commissions. With around 8,400 employees across the U.S. as of December 31, LPL Financial is a prominent player in the financial services industry.

This incident is not the first time LPL Financial has been in the spotlight for inappropriate behavior. In a separate case, the company dismissed its CEO for breaching the company’s code of conduct. These series of events reflect the varying issues that large financial institutions may face in upholding regulatory standards and ethical practices.

Despite the setbacks, the SEC charges against LPL Financial are a clear demonstration that financial institutions must comply with anti-money laundering regulations to protect the financial system’s integrity. By holding companies accountable for their actions, regulatory bodies like the SEC play a crucial role in safeguarding the financial markets and deterring illicit financial activities that could have serious repercussions on the economy. Moving forward, it is imperative that companies like LPL Financial take necessary steps to enhance their compliance systems and ensure such lapses do not occur in the future.