In re LPL Financial LLC

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 102008
 / December 20, 2024
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6799 / December 20, 2024 
ADMINISTRATIVE PROCEEDING 
File No. 3-22
374 
In the Matter of 
LPL Financial LLC 
Respondent. 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934 AND SECTION 203(e) OF THE 
INVESTMENT ADVISERS ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER  
I. 
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 
public interest that public administrative and cease-and-desist proceedings be, and hereby are, 
instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against LPL 
Financial LLC (“LPL” or “Respondent”).   
II. 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Respondent admits 
the facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 203(e) of 
the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 
Cease-and-Desist Order (“Order”), as set forth below. 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds that: 
 
Summary 
 
1. These proceedings arise out of Respondent’s failure to submit to the Commission 
complete and accurate data in response to Commission staff electronic blue sheets (“EBS”) 
requests, resulting in the reporting of EBS that were incomplete or deficient.  
2. Commission staff routinely sends requests for securities trading records to market 
makers, broker-dealers and/or clearing firms in order to review trading activity, and firms provide 
the requested records in a universal electronic format known as the EBS format.  It is a fundamental 
obligation of broker-dealers to provide complete and accurate EBS data when requested by 
representatives of the Commission to do so.  The submission of complete and accurate EBS data 
is critical to many aspects of the Commission’s operations and its ability to discharge its 
enforcement and regulatory mandates.  The failure of a broker-dealer to provide complete and 
accurate EBS information in response to a Commission request can impact the Commission’s 
ability to discharge its statutory obligations, undermine the integrity of its investigations and 
examinations, and ultimately interfere with the Commission’s ability to protect investors. 
3. From at least July 2018 through May 2021 (the “Relevant Period”), in response to 
requests from the Commission, Respondent made at least 3,679 EBS submissions to the 
Commission that contained inaccurate information or omissions, resulting from ten types of errors.  
Those errors resulted in the misreporting of trade data for at least 399,000 transactions.  As a result, 
Respondent violated the recordkeeping and reporting requirements of Section 17(a)(1) of the 
Exchange Act and Rules 17a-4(j) and 17a-25 thereunder. 
Respondent 
4. LPL is a California limited liability company with its principal office in Fort Mill, 
South Carolina.  Respondent has been dually registered with the Commission as a broker-dealer 
since August 1973 and as an investment adviser since August 1975. 
Facts 
A. LPL’s Deficient EBS Submissions 
 
5. During the Relevant Period, in response to requests from the Commission, LPL 
made at least 3,679 EBS submissions to the Commission that contained inaccurate information or 
omissions, resulting from ten types of errors.  Those errors resulted in the misreporting of trade data 
for at least 399,000 transactions.   
6. LPL’s submissions during the Relevant Period, among other things, omitted 
responsive transactions and/or contained inaccurate information about securities transactions 
reported, including with respect to EBS fields for average price accounts, order execution time, 

 3 
exchange codes, and transaction type identifiers.  Many transaction records were affected by more 
than one type of error.   
7. The errors in LPL’s EBS submissions were caused, in large part, by coding issues in 
LPL’s and/or its vendors’ EBS reporting systems.  For example, due to coding errors and 
programming issues in one vendor’s systems, LPL failed to identify the correct transaction type 
identifier field for more than 35,600 transactions, submitted EBS information that did not contain 
the proper field for LPL’s average price accounts (e.g., house accounts used to incrementally 
execute orders over time and then transfer the shares between the customer’s account and the 
average price account in one transaction) for at least 26,000 transactions, and omitted more than 
1,700 responsive average price account transactions.  Moreover, due to coding errors in another 
vendor’s coding system, LPL reported the order execution times utilizing a 12-hour instead of 24-
hour format, as required, for at least 8,600 transactions. 
8. In addition, LPL provided EBS data with missing or inaccurate fields relating to firm 
or customer identifying information such as large trader identifiers and contra-party identifiers, as 
well as the address, state, and employer fields.  For example, due to LPL’s coding errors and other 
deficiencies, LPL either failed to apply large trader identifiers or applied inaccurate large trader 
identifiers for more than 340,000 transactions.  As a result of its vendor’s programming issues, LPL 
also failed to populate or provided the incorrect contra-party identifier information for more than 
13,000 transactions.  
9. At the time of at least some of its EBS submissions, LPL did not detect the above 
errors at least in part because it did not have reasonable procedures to verify that all of the 
information it was reporting was accurate.  LPL did not, for example, conduct adequate periodic 
sampling, manual validation and review of information received from or transmitted by vendors 
that assisted in its preparation of EBS submissions, and did not have sufficient quality controls in 
place to ensure the completeness and accuracy of its EBS data prior to its submissions.   
B. Respondent’s Remedial Efforts 
10. LPL engaged in voluntary remedial efforts concerning its EBS systems and control 
environment.  Specifically, LPL hired a regulatory and technology consultant to perform a 
comprehensive assessment of its EBS regulatory reporting controls and processes, implement new 
EBS reporting software, and assist LPL in the identification and correction of the deficiencies in its 
EBS reporting.  LPL further developed and implemented an EBS pre-submission application that 
reviews responsive transactional records, hired new personnel devoted to EBS reporting, and made 
other structural and procedural enhancements to its EBS reporting program.  LPL also self-
reported four of the ten types of errors underlying this Order.  LPL remediated the deficiencies 
addressed by this Order, and resubmitted corrected EBS to the Commission. 
Violations of the Federal Securities Laws 
 
11. Section 17(a)(1) of the Exchange Act requires, among other things, that broker-
dealers make and keep for prescribed periods such records, furnish such copies thereof, and make 
and disseminate such reports as the Commission, by rule, prescribes as necessary or appropriate in 

 4 
the public interest, for the protection of investors, or otherwise in furtherance of the Exchange Act.  
Exchange Act Rule 17a-4(j) requires, in part, broker-dealers such as LPL to furnish promptly 
legible, true, complete, and current copies of those records of the member, broker, or dealer that are 
required to be preserved under Exchange Act Rule 17a-4, or any other records of the member, 
broker, or dealer subject to examination under Section 17(b) of the Exchange Act that are requested 
by a representative of the Commission.  Likewise, Exchange Act Rule 17a-25 requires broker-
dealers such as LPL to, upon request, electronically submit to the Commission the securities 
transaction information as required in the rule. 
12. As described above, LPL failed to furnish complete records to the Commission 
staff that were requested by the Commission in its EBS requests.  Therefore, LPL willfully
1
 
violated the recordkeeping and reporting requirements of Section 17(a)(1) of the Exchange Act 
and Rule 17a-4(j) thereunder by failing to furnish promptly true and complete EBS information 
as requested by Commission staff from at least July 2018 through May 2021.  In addition, LPL 
willfully violated Exchange Act Rule 17a-25 by failing to submit electronically certain securities 
transaction information to the Commission through the EBS system in response to requests made 
by the Commission. 
LPL’s Remedial Efforts 
 
In determining to accept the Offer, the Commission considered remedial acts undertaken by 
Respondent and cooperation afforded the Commission staff. 
IV. 
 
In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent LPL’s Offer. 
 
Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) 
of the Advisers Act, it is hereby ORDERED that: 
 
A. Respondent LPL cease and desist from committing or causing any violations and 
any future violations of Section 17(a)(1) of the Exchange Act and Rules 17a-4(j) and 17a-25 
promulgated thereunder. 
 
B. Respondent LPL is censured. 
 
C. Respondent LPL shall, within ten (10) days of the entry of this Order, pay a civil 
money penalty in the amount of $900,000.00 to the Securities and Exchange Commission for 
 
1
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act and 
Section 203(e) of the Advisers Act, “‘means no more than that the person charged with the duty 
knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes 
v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be 
aware that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 

 5 
transfer to the general fund of the United States Treasury, subject to Exchange Act Section 
21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 
§ 3717.   
 
Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request; 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 
 
Enterprise Services Center  
Accounts Receivable Branch  
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard  
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
LPL as a Respondent in these proceedings, and the file number of these proceedings; a copy of 
the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 
Street, Suite 20-100, New York, NY 10004. 
 
D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 
of the Penalty Offset to the Securities and Exchange Commission.   
 
 
 
 
 
 
 

 6 
Such a payment shall not be deemed an additional civil penalty and shall not be deemed to 
change the amount of the civil penalty imposed in this proceeding.  For purposes of this 
paragraph, a “Related Investor Action” means a private damages action brought against 
Respondent by or on behalf of one or more investors based on substantially the same facts as 
alleged in the Order instituted by the Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
        Secretary 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 102008 / December 20, 2024

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6799 / December 20, 2024 

ADMINISTRATIVE PROCEEDING 
File No. 3-22374 

In the Matter of 

LPL Financial LLC 

Respondent. 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 15(b) AND 21C 

OF THE SECURITIES EXCHANGE ACT OF 

1934 AND SECTION 203(e) OF THE 

INVESTMENT ADVISERS ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER  

I. 

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) and Section 203(e) of the Investment Advisers Act of 1940 (“Advisers Act”) against LPL 

Financial LLC (“LPL” or “Respondent”).   

II. 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Respondent admits 

the facts set forth in Section III below, acknowledges that its conduct violated the federal securities 

laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 

consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 

Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 203(e) of 

the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a 

Cease-and-Desist Order (“Order”), as set forth below. 



 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds that: 

 

Summary 

 

1. These proceedings arise out of Respondent’s failure to submit to the Commission 

complete and accurate data in response to Commission staff electronic blue sheets (“EBS”) 

requests, resulting in the reporting of EBS that were incomplete or deficient.  

2. Commission staff routinely sends requests for securities trading records to market 

makers, broker-dealers and/or clearing firms in order to review trading activity, and firms provide 

the requested records in a universal electronic format known as the EBS format.  It is a fundamental 

obligation of broker-dealers to provide complete and accurate EBS data when requested by 

representatives of the Commission to do so.  The submission of complete and accurate EBS data 

is critical to many aspects of the Commission’s operations and its ability to discharge its 

enforcement and regulatory mandates.  The failure of a broker-dealer to provide complete and 

accurate EBS information in response to a Commission request can impact the Commission’s 

ability to discharge its statutory obligations, undermine the integrity of its investigations and 

examinations, and ultimately interfere with the Commission’s ability to protect investors. 

3. From at least July 2018 through May 2021 (the “Relevant Period”), in response to 

requests from the Commission, Respondent made at least 3,679 EBS submissions to the 

Commission that contained inaccurate information or omissions, resulting from ten types of errors.  

Those errors resulted in the misreporting of trade data for at least 399,000 transactions.  As a result, 

Respondent violated the recordkeeping and reporting requirements of Section 17(a)(1) of the 

Exchange Act and Rules 17a-4(j) and 17a-25 thereunder. 

Respondent 

4. LPL is a California limited liability company with its principal office in Fort Mill, 

South Carolina.  Respondent has been dually registered with the Commission as a broker-dealer 

since August 1973 and as an investment adviser since August 1975. 

Facts 

A. LPL’s Deficient EBS Submissions 

 

5. During the Relevant Period, in response to requests from the Commission, LPL 

made at least 3,679 EBS submissions to the Commission that contained inaccurate information or 

omissions, resulting from ten types of errors.  Those errors resulted in the misreporting of trade data 

for at least 399,000 transactions.   

6. LPL’s submissions during the Relevant Period, among other things, omitted 

responsive transactions and/or contained inaccurate information about securities transactions 

reported, including with respect to EBS fields for average price accounts, order execution time, 



 3 

exchange codes, and transaction type identifiers.  Many transaction records were affected by more 

than one type of error.   

7. The errors in LPL’s EBS submissions were caused, in large part, by coding issues in 

LPL’s and/or its vendors’ EBS reporting systems.  For example, due to coding errors and 

programming issues in one vendor’s systems, LPL failed to identify the correct transaction type 

identifier field for more than 35,600 transactions, submitted EBS information that did not contain 

the proper field for LPL’s average price accounts (e.g., house accounts used to incrementally 

execute orders over time and then transfer the shares between the customer’s account and the 

average price account in one transaction) for at least 26,000 transactions, and omitted more than 

1,700 responsive average price account transactions.  Moreover, due to coding errors in another 

vendor’s coding system, LPL reported the order execution times utilizing a 12-hour instead of 24-

hour format, as required, for at least 8,600 transactions. 

8. In addition, LPL provided EBS data with missing or inaccurate fields relating to firm 

or customer identifying information such as large trader identifiers and contra-party identifiers, as 

well as the address, state, and employer fields.  For example, due to LPL’s coding errors and other 

deficiencies, LPL either failed to apply large trader identifiers or applied inaccurate large trader 

identifiers for more than 340,000 transactions.  As a result of its vendor’s programming issues, LPL 

also failed to populate or provided the incorrect contra-party identifier information for more than 

13,000 transactions.  

9. At the time of at least some of its EBS submissions, LPL did not detect the above 

errors at least in part because it did not have reasonable procedures to verify that all of the 

information it was reporting was accurate.  LPL did not, for example, conduct adequate periodic 

sampling, manual validation and review of information received from or transmitted by vendors 

that assisted in its preparation of EBS submissions, and did not have sufficient quality controls in 

place to ensure the completeness and accuracy of its EBS data prior to its submissions.   

B. Respondent’s Remedial Efforts 

10. LPL engaged in voluntary remedial efforts concerning its EBS systems and control 

environment.  Specifically, LPL hired a regulatory and technology consultant to perform a 

comprehensive assessment of its EBS regulatory reporting controls and processes, implement new 

EBS reporting software, and assist LPL in the identification and correction of the deficiencies in its 

EBS reporting.  LPL further developed and implemented an EBS pre-submission application that 

reviews responsive transactional records, hired new personnel devoted to EBS reporting, and made 

other structural and procedural enhancements to its EBS reporting program.  LPL also self-

reported four of the ten types of errors underlying this Order.  LPL remediated the deficiencies 

addressed by this Order, and resubmitted corrected EBS to the Commission. 

Violations of the Federal Securities Laws 
 

11. Section 17(a)(1) of the Exchange Act requires, among other things, that broker-

dealers make and keep for prescribed periods such records, furnish such copies thereof, and make 

and disseminate such reports as the Commission, by rule, prescribes as necessary or appropriate in 



 4 

the public interest, for the protection of investors, or otherwise in furtherance of the Exchange Act.  

Exchange Act Rule 17a-4(j) requires, in part, broker-dealers such as LPL to furnish promptly 

legible, true, complete, and current copies of those records of the member, broker, or dealer that are 

required to be preserved under Exchange Act Rule 17a-4, or any other records of the member, 

broker, or dealer subject to examination under Section 17(b) of the Exchange Act that are requested 

by a representative of the Commission.  Likewise, Exchange Act Rule 17a-25 requires broker-

dealers such as LPL to, upon request, electronically submit to the Commission the securities 

transaction information as required in the rule. 

12. As described above, LPL failed to furnish complete records to the Commission 

staff that were requested by the Commission in its EBS requests.  Therefore, LPL willfully1 

violated the recordkeeping and reporting requirements of Section 17(a)(1) of the Exchange Act 

and Rule 17a-4(j) thereunder by failing to furnish promptly true and complete EBS information 

as requested by Commission staff from at least July 2018 through May 2021.  In addition, LPL 

willfully violated Exchange Act Rule 17a-25 by failing to submit electronically certain securities 

transaction information to the Commission through the EBS system in response to requests made 

by the Commission. 

LPL’s Remedial Efforts 
 

In determining to accept the Offer, the Commission considered remedial acts undertaken by 

Respondent and cooperation afforded the Commission staff. 

IV. 
 

In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent LPL’s Offer. 

 
Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Section 203(e) 

of the Advisers Act, it is hereby ORDERED that: 
 

A. Respondent LPL cease and desist from committing or causing any violations and 

any future violations of Section 17(a)(1) of the Exchange Act and Rules 17a-4(j) and 17a-25 

promulgated thereunder. 

 

B. Respondent LPL is censured. 

 

C. Respondent LPL shall, within ten (10) days of the entry of this Order, pay a civil 

money penalty in the amount of $900,000.00 to the Securities and Exchange Commission for 

 

1  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act and 

Section 203(e) of the Advisers Act, “‘means no more than that the person charged with the duty 

knows what he is doing.’”  Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes 

v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).  There is no requirement that the actor “also be 

aware that he is violating one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). 



 5 

transfer to the general fund of the United States Treasury, subject to Exchange Act Section 

21F(g)(3).  If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 

§ 3717.   

 

Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 
request; 

 
(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 

 

Enterprise Services Center  

Accounts Receivable Branch  

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard  

Oklahoma City, OK 73169 
 

Payments by check or money order must be accompanied by a cover letter identifying 

LPL as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Thomas P. Smith, Jr., Associate 

Regional Director, Division of Enforcement, Securities and Exchange Commission, 100 Pearl 

Street, Suite 20-100, New York, NY 10004. 

 

D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 

of the Penalty Offset to the Securities and Exchange Commission.   

 

 

 

 

 

 

 

http://www.sec.gov/about/offices/ofm.htm


 6 

Such a payment shall not be deemed an additional civil penalty and shall not be deemed to 

change the amount of the civil penalty imposed in this proceeding.  For purposes of this 

paragraph, a “Related Investor Action” means a private damages action brought against 

Respondent by or on behalf of one or more investors based on substantially the same facts as 

alleged in the Order instituted by the Commission in this proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

        Secretary