LPL Fined Nearly $1M Over Inappropriate REIT Sales

The New Jersey Bureau of Securities (Bureau) fined LPL Financial $950,000 and an additional $25,000 to be put into a state investor education fund over supervisory failures tied to sales of illiquid investments.

Did your LPL broker overconcentrate your portfolio with illiquid investments? Contact the Business Trial Group for a free case review.

LPL Brokers Sold Unsuitable Investments, Failed to Follow Supervisory Procedures

According to the Bureau, several LPL brokers recommended high concentrations of real estate investment trusts (REITs) in customers’ portfolios that were in clear violation of the REIT purchase limitations.

A REIT is a corporation, trust, or association that owns income-producing real estate. REITs pool the capital of numerous investors to purchase a portfolio of properties that the average individual investor may not otherwise be able to purchase themselves.

LPL has a long history of fines and penalties for nontraded REIT sales practice violations.

A nontraded REIT is a type of REIT that has no public trading market. As a result, they are illiquid investments and often have restrictions on early redemptions. Investors should be aware that investing in a nontraded REIT will limit their access to their investment funds for a lengthy time period, depending upon the terms of the investment.

In LPL’s case, the Bureau’s report revealed that LPL’s brokers ignored the nontraded REITs purchase limitations and caused customers to purchase more than was allowed and suitable for their portfolio. For example, the prospectus for a nontraded REIT described in the Bureau’s report only allowed a total investment of up to 10% of the investor’s liquid net worth. An LPL broker, however, recommended that a customer with a $350,000 liquid net worth purchase $69,000, or close to 20% of the customer’s entire liquid net worth, of non-traded REITS. In return, LPL received gross sales commissions of up to 10%.

LPL has a long history of fines and penalties for sales practice violations concerning its sale of nontraded REITs. For example, in 2015 alone, LPL paid over $2 million in fines over inappropriate sales of nontraded REITs.

Contingency-Fee Securities Litigation

If your LPL broker over-concentrated your portfolio with illiquid investments, causing you significant financial losses, the Business Trial Group may be able to help. We routinely bring lawsuits against LPL and other brokerages to recover losses incurred due to investment mismanagement, such as over-concentration, churning, unsuitable recommendations, and other negligent advice.

As the largest Plaintiff’s law firm in the country, our clients pay no upfront fees or retainers, and we only receive a fee if we successfully recover compensation on your behalf. For a no cost and no obligation case review, please call us at (877) 599 3102 or fill out our case review form.