In re LPL Financial LLC

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 100709 / August 14, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6658 / August 14, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22006 
 
 
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 SECTIONS 203(e) AND 203(k) 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 Sections 203(e) and 203(k) 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 (“Offer”) that 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 Sections 203(e) 
and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial 
Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 

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III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on broker-dealers 
and registered investment advisers to ensure that they responsibly discharge their crucial role in 
our markets.  The Commission has long said that compliance with these requirements is essential 
to investor protection and the Commission’s efforts to further its mandate of protecting investors, 
maintaining fair, orderly, and efficient markets, and facilitating capital formation. 
2. These proceedings arise out of the widespread and longstanding failure of LPL’s 
investment adviser representatives (“IARs”), registered representatives, and/or employees 
(collectively, "personnel”) throughout the firm to adhere to certain of these essential 
requirements and the firm’s own policies.  Using their personal devices, these personnel 
communicated both internally and externally by text messages and/or other unapproved written 
communications platforms (“off-channel communications”). 
3. From at least June 2019 (the “Relevant Period”), LPL personnel sent and received 
off-channel communications that were records required to be maintained under Exchange Act 
Rule 17a-4(b)(4) and/or Advisers Act Rule 204-2(a)(7).  Respondent did not maintain or 
preserve the substantial majority of these written communications.  Respondent’s failures were 
firm-wide, including financial advisors who, together with other personnel they supervised, were 
responsible for generating some of the highest levels of revenue for LPL during a time period 
within the Relevant Period.  As a result, LPL violated Section 17(a) of the Exchange Act and 
Rule 17a-4(b)(4) thereunder and Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder. 
4. LPL’s widespread failure to implement a system reasonably expected to 
determine whether personnel were following its policies and procedures that prohibit off-channel 
communications led to its failure to reasonably supervise its personnel within the meaning of 
Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers Act.  
5. During the Relevant Period, LPL received and responded to Commission 
subpoenas for documents and/or records requests in a number of Commission investigations.  As 
a result, LPL’s recordkeeping failures likely impacted the Commission’s ability to carry out its 
regulatory functions and investigate violations of the federal securities laws across these 
investigations.   
6. Commission staff found LPL’s misconduct after commencing a risk-based 
initiative to investigate the use of off-channel and unpreserved communications at investment 
advisers.  LPL has initiated a review of its recordkeeping failures and begun a program of 
remediation.  As set forth in the Undertakings below, LPL will retain an independent compliance 
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

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consultant to review and assess LPL’s remedial steps relating to its recordkeeping practices, 
policies and procedures, related supervisory practices, and employment actions. 
Respondent 
7. LPL is a California limited liability company with its principal office in Fort Mill, 
South Carolina, and has been registered with the Commission as a broker-dealer since 1973 and as 
an investment adviser since 1975.  It is a wholly owned indirect subsidiary of LPL Financial 
Holdings, Inc., headquartered in San Diego, California, and incorporated in Delaware. 
Recordkeeping Requirements under the Exchange and Advisers Acts 
8. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 
authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 
advisers to make and keep for prescribed periods, and furnish copies of, such records as 
necessary or appropriate in the public interest, for the protection of investors or, with respect to 
the Exchange Act, otherwise in furtherance of the purposes of the Exchange Act. 
9. The Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 
under the Advisers Act pursuant to this authority.  These rules specify the manner and length of 
time that the records created in accordance with Commission rules, and certain other records 
produced by broker-dealers or investment advisers, must be maintained and produced promptly 
to Commission representatives.   
10. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 
17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 
communications received and copies of all communications sent relating to the broker-dealer’s 
business as such.  These rules impose minimum recordkeeping requirements that are based on 
standards a prudent broker-dealer should follow in the normal course of business.  
11. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 
12. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 
204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of all 
communications received and copies of all written communications sent relating to, among other 
things: (a) any recommendation made or proposed to be made and any advice given or proposed to 
be given; (b) any receipt, disbursement or delivery of funds or securities; (c) the placing or 
execution of any order to purchase or sell any security; or (d) predecessor performance and the 
performance or rate of return of any or all managed accounts, portfolios, or securities 
recommendations. 

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LPL’s Policies and Procedures 
13. LPL maintained certain policies and procedures designed to ensure the retention 
of business-related records, including electronic communications, in compliance with the 
relevant recordkeeping provisions.  For example, since September 2019, LPL’s approved 
communications methods have included a texting application tool for communications between 
its personnel and clients or customers.  Despite the availability of this tool, during the Relevant 
Period, personnel sent and received business communications using unapproved communications 
methods. 
14. LPL personnel were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and that they 
should not use personal email or unapproved chat or text messaging applications for business 
purposes. 
15. Messages sent through LPL’s approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Messages sent through 
unapproved communications methods, such as unapproved applications on personal devices, 
were not monitored, subject to review, or archived. 
16. LPL conducted trainings for its personnel which were designed to address the 
firm’s supervision of its personnel and adherence to LPL’s books and recordkeeping 
requirements.  The policies and related trainings notified personnel that electronic 
communications on approved platforms were subject to surveillance by LPL.  LPL also required 
from its personnel annual attestations of compliance with its policies and procedures regarding 
electronic communications. 
17. LPL, however, failed to implement a system of follow-up and review reasonably 
expected to determine whether personnel were following its policies.  While permitting its 
personnel to use approved communications methods, including on personal phones, for business 
communications, LPL failed to implement sufficient monitoring to ensure that its recordkeeping 
and communications policies were being followed. 
LPL’s Recordkeeping Failures Across Its Brokerage and Investment Advisory Businesses 
18. In October 2022, the Commission staff commenced a risk-based initiative to 
investigate whether investment advisers were properly maintaining communications that they 
were required to preserve as records under the Advisers Act.  LPL cooperated with the 
investigation by proactively gathering and reviewing communications from the personal devices 
of certain of its personnel and responding to the staff’s requests for additional information.  LPL 
also produced, at the request of the Commission staff, off-channel communications of a subset of 
these personnel relating to LPL’s investment advisory and brokerage businesses.  These 
personnel included financial advisors who, together with other personnel they supervised, were 
responsible for generating some of the highest levels of revenue for LPL during a time period 
within the Relevant Period.  Each of these IARs is a supervised person of LPL in its capacity 
both as an investment adviser and as a broker-dealer. 

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19. The Commission staff’s investigation found pervasive off-channel 
communications by LPL personnel.  Nearly all LPL personnel whose communications were 
reviewed in the course of the investigation had sent or received multiple off-channel 
communications that were records required to be preserved by LPL under the Advisers Act 
and/or Exchange Act.  These off-channel communications were sent among LPL personnel as 
well as to and from LPL clients and customers.  
20. The investigation found numerous off-channel communications that were records 
required to be preserved under the Exchange Act.  For example, an LPL registered representative 
sent a text message to a colleague concerning the execution of multiple trades in a brokerage 
account.   
21. Off-channel communications included records required to be preserved under the 
Advisers Act because they related to advisory recommendations made or proposed to be made or 
advice given or proposed to be given.  There are multiple examples of LPL IARs exchanging 
text messages relating to investment advice.   
22. Other off-channel communications were records required to be preserved under 
the Advisers Act because they related to the investment adviser’s receipt, disbursement or 
delivery of funds or securities.  For example, an LPL IAR and client exchanged multiple text 
messages concerning the receipt of additional funds by the investment adviser from the client. 
23. The investigation also found off-channel communications that were records 
required to be preserved under the Advisers Act because they related to the placing or execution of 
an order to purchase or sell securities.  For example, an LPL IAR exchanged multiple text 
messages regarding the placement of securities trades in a client account. 
LPL’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
24. During the Relevant Period, LPL received and responded to Commission 
subpoenas for documents and/or records requests in Commission investigations.  By failing to 
maintain and preserve required records relating to its businesses, LPL likely deprived the 
Commission of these off-channel communications in various investigations. 

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LPL’s Violations and Failure to Supervise 
25. As a result of the conduct described above, from at least June 2019 through the 
date of this Order, LPL willfully
2
 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder.   
26. As a result of the conduct described above, from at least June 2019 through the 
date of this Order, LPL willfully violated Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder. 
27. As a result of the conduct described above, LPL failed reasonably to supervise its 
personnel, with a view to preventing or detecting certain of its supervised persons’ aiding and 
abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, within 
the meaning of Section 15(b)(4)(E) of the Exchange Act.  
28. As a result of the conduct described above, LPL failed reasonably to supervise its 
personnel, with a view to preventing or detecting certain of its supervised persons’ aiding and 
abetting violations of Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder, within 
the meaning of Section 203(e)(6) of the Advisers Act. 
LPL’s Remedial Efforts 
29. In determining to accept the Offer, the Commission considered steps undertaken by 
LPL prior to and after being approached by Commission staff, including rolling out an on-channel 
texting application tool in September 2019 that facilitated compliant communications between 
LPL financial advisors who enrolled in that application tool and their clients and customers, as 
well as cooperation afforded the Commission staff. 
Undertakings 
30. Prior to this action, LPL enhanced its policies and procedures concerning the use 
of approved communications methods, including on personal devices.  In addition, LPL has 
undertaken to: 
31. Independent Compliance Consultant. 
a.  LPL shall retain, within thirty (30) days of the entry of this Order, the services 
of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by LPL. 
 
b.  LPL will oversee the work of the Compliance Consultant. 
 
 
2
  “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.’”  See 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)). 

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c.  LPL shall provide to the Commission staff, within sixty (60) days of the entry 
of this Order, a copy of the engagement letter detailing the Compliance Consultant’s 
responsibilities, which shall include a comprehensive compliance review as described 
below.  LPL shall require that, within ninety (90) days of the date of the engagement 
letter, the Compliance Consultant conduct: 
 
i.  A comprehensive review of LPL’s supervisory, compliance, and other 
policies and procedures designed to ensure that LPL’s electronic communications, 
including those found on personal electronic devices, including without 
limitation, cellular phones (“Personal Devices”), are preserved in accordance with 
the requirements of the federal securities laws. 
 
ii.  A comprehensive review of training conducted by LPL to ensure 
personnel are complying with the requirements regarding the preservation of 
electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that LPL personnel certify in writing on a quarterly basis that they are 
complying with preservation requirements.  
 
iii.  An assessment of the surveillance program measures implemented by 
LPL to ensure compliance, on an ongoing basis, with the requirements found in 
the federal securities laws to preserve electronic communications, including those 
found on Personal Devices. 
 
iv.  An assessment of the technological solutions that LPL has begun 
implementing to meet the record retention requirements of the federal securities 
laws, including an assessment of the likelihood that LPL personnel will use the 
technological solutions going forward and a review of the measures employed by 
LPL to track personnel usage of new technological solutions.  
 
v.  An assessment of the measures used by LPL to prevent the use of 
unauthorized communications methods for business communications by its 
personnel.  This assessment should include, but not be limited to, a review of 
LPL’s policies and procedures to ascertain if they provide for any significant 
technology and/or behavioral restrictions that help prevent the risk of the use of 
unapproved communications methods on Personal Devices (e.g., trading floor 
restrictions).   
 
vi.  A review of LPL’s electronic communications surveillance routines to 
ensure that electronic communications through approved communications 
methods found on Personal Devices are incorporated into LPL’s overall 
communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by LPL to address 
instances of non-compliance by LPL personnel with LPL’s policies and 
procedures concerning the use of Personal Devices to communicate about LPL 

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business in the past.  This review shall include a survey of how LPL determined 
which personnel failed to comply with LPL policies and procedures, the 
corrective action carried out, an evaluation of who violated policies and why, 
what penalties were imposed, and whether penalties were handed out consistently 
across business lines and seniority levels.   
 
d.  LPL shall require that, within forty-five (45) days after completion of the 
review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 
shall submit a detailed written report of its findings to LPL and to the Commission staff 
(the “Report”).  LPL shall require that the Report include a description of the review 
performed, the names of the individuals who performed the review, the conclusions 
reached, the Compliance Consultant’s recommendations for changes in or improvements 
to LPL’s policies and procedures, and a summary of the plan for implementing the 
recommended changes in or improvements to LPL’s policies and procedures. 
 
e.  LPL shall adopt all recommendations contained in the Report within ninety 
(90) days of the date of the Report; provided, however, that within forty-five (45) days 
after the date of the Report, LPL shall advise the Compliance Consultant and the 
Commission staff in writing of any recommendations that LPL considers to be unduly 
burdensome, impractical, or inappropriate.  With respect to any recommendation that 
LPL considers unduly burdensome, impractical, or inappropriate, LPL need not adopt 
such recommendation at that time, but shall propose in writing an alternative policy, 
procedure, or disclosure designed to achieve the same objective or purpose. 
 
f.  As to any recommendation concerning LPL’s policies or procedures on which 
LPL and the Compliance Consultant do not agree, LPL and the Compliance Consultant 
shall attempt in good faith to reach an agreement within sixty (60) days after the date of 
the Report.  Within fifteen (15) days after the conclusion of the discussion and evaluation 
by LPL and the Compliance Consultant, LPL shall require that the Compliance 
Consultant inform LPL and the Commission staff in writing of the Compliance 
Consultant’s final determination concerning any recommendation that LPL considers to 
be unduly burdensome, impractical, or inappropriate.  LPL shall abide by the 
determinations of the Compliance Consultant and, within sixty (60) days after final 
agreement between LPL and the Compliance Consultant or final determination by the 
Compliance Consultant, whichever occurs first, LPL shall adopt and implement all of the 
recommendations that the Compliance Consultant deems appropriate. 
 
g.  LPL shall cooperate fully with the Compliance Consultant and shall provide 
the Compliance Consultant with access to such of LPL’s files, books, records, and 
personnel as are reasonably requested by the Compliance Consultant for review. 
 
h. LPL shall not have the authority to terminate the Compliance Consultant or 
substitute another compliance consultant for the initial Compliance Consultant, without 
the prior written approval of the Commission staff.  LPL shall compensate the 
Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 

9 
 
i.  For the period of engagement and for a period of two (2) years from 
completion of the engagement, LPL shall not (i) retain the Compliance Consultant for 
any other professional services outside of the services described in this Order; (ii) enter 
into any other professional relationship with the Compliance Consultant, including any 
employment, consultant, attorney-client, auditing or other professional relationship; or 
(iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 
affiliates, employers, directors, officers, employees, or agents acting in their capacity as 
such. 
 
j.  The Report by the Compliance Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, the Report and the contents thereof are intended to remain and 
shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 
in writing, (3) to the extent that the Commission determines in its sole discretion that 
disclosure would be in furtherance of the Commission’s discharge of its duties and 
responsibilities, or (4) as otherwise required by law. 
 
32. One-Year Evaluation.  LPL shall require the Compliance Consultant to assess 
LPL’s program for the preservation, as required under the federal securities laws, of electronic 
communications, including those found on Personal Devices, commencing one year after 
submitting the Report required by Paragraph 31.d above.  LPL shall require this review to 
evaluate LPL’s progress in the areas described in Paragraph 31.c.i-vii above.  After this review, 
LPL shall require the Compliance Consultant to submit a report (the “One Year Report”) to LPL 
and the Commission staff and shall ensure that the One Year Report includes an updated 
assessment of LPL’s policies and procedures with regard to the preservation of electronic 
communications (including those found on Personal Devices), training, surveillance programs, 
and technological solutions implemented in the prior year period.  
33. Reporting Discipline Imposed.  For two (2) years following the entry of this Order, 
LPL shall notify the Commission staff as follows upon the imposition of any discipline imposed by 
LPL, including, but not limited to: written warnings; loss of any pay, bonus, or incentive 
compensation; or the termination of employment or contract; with respect to any personnel found 
to have violated LPL’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices:  at least forty-eight (48) hours before 
the filing of a Form U-5, or within ten (10) days of the imposition of other discipline.   
34. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, LPL will have its Internal Audit function conduct a separate audit(s) within 
one year of the issuance of the One Year Report to assess LPL’s progress in the areas described in 
Paragraph 31.c.i-vii above.  After completion of this audit(s), LPL shall ensure that Internal Audit 
submits a report to LPL and to the Commission staff. 

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35. Recordkeeping.  LPL shall preserve, for a period of not less than six (6) years 
from the end of the fiscal year last used, the first two (2) years in an easily accessible place, any 
record of compliance with these undertakings. 
36. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 
37. Certification.  LPL shall certify, in writing, compliance with the undertakings set 
forth above.  The certification shall identify the undertakings, provide written evidence of 
compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 
compliance.  The Commission staff may make reasonable requests for further evidence of 
compliance, and Respondent agrees to provide such evidence.  The certification and supporting 
material shall be submitted to Thomas P. Smith, Jr., Associate Regional Director, Division of 
Enforcement, Securities and Exchange Commission, New York Regional Office, 100 Pearl Street, 
Suite 20-100, New York, NY 10004, or such other person as the Commission staff may request, 
with a copy to the Office of Chief Counsel of the Enforcement Division, no later than sixty (60) 
days from the date of the completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Sections 
203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 
 
A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
B. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 
C. Respondent is censured.  
 
D. Respondent shall comply with the undertakings enumerated in paragraphs 30 to 
37 above. 
  
 E. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $50,000,000 to the Securities and Exchange Commission for 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.   
 

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 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 the 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, New York 
Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004.  
 
  

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 F. 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.  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. 100709 / August 14, 2024 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6658 / August 14, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22006 

 

 

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 SECTIONS 203(e) AND 203(k) 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 Sections 203(e) and 203(k) 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 (“Offer”) that 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 Sections 203(e) 

and 203(k) 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 finds1 that 

 

Summary 

1. The federal securities laws impose recordkeeping requirements on broker-dealers 

and registered investment advisers to ensure that they responsibly discharge their crucial role in 

our markets.  The Commission has long said that compliance with these requirements is essential 

to investor protection and the Commission’s efforts to further its mandate of protecting investors, 

maintaining fair, orderly, and efficient markets, and facilitating capital formation. 

2. These proceedings arise out of the widespread and longstanding failure of LPL’s 

investment adviser representatives (“IARs”), registered representatives, and/or employees 

(collectively, "personnel”) throughout the firm to adhere to certain of these essential 

requirements and the firm’s own policies.  Using their personal devices, these personnel 

communicated both internally and externally by text messages and/or other unapproved written 

communications platforms (“off-channel communications”). 

3. From at least June 2019 (the “Relevant Period”), LPL personnel sent and received 

off-channel communications that were records required to be maintained under Exchange Act 

Rule 17a-4(b)(4) and/or Advisers Act Rule 204-2(a)(7).  Respondent did not maintain or 

preserve the substantial majority of these written communications.  Respondent’s failures were 

firm-wide, including financial advisors who, together with other personnel they supervised, were 

responsible for generating some of the highest levels of revenue for LPL during a time period 

within the Relevant Period.  As a result, LPL violated Section 17(a) of the Exchange Act and 

Rule 17a-4(b)(4) thereunder and Section 204 of the Advisers Act and Rule 204-2(a)(7) 

thereunder. 

4. LPL’s widespread failure to implement a system reasonably expected to 

determine whether personnel were following its policies and procedures that prohibit off-channel 

communications led to its failure to reasonably supervise its personnel within the meaning of 

Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers Act.  

5. During the Relevant Period, LPL received and responded to Commission 

subpoenas for documents and/or records requests in a number of Commission investigations.  As 

a result, LPL’s recordkeeping failures likely impacted the Commission’s ability to carry out its 

regulatory functions and investigate violations of the federal securities laws across these 

investigations.   

6. Commission staff found LPL’s misconduct after commencing a risk-based 

initiative to investigate the use of off-channel and unpreserved communications at investment 

advisers.  LPL has initiated a review of its recordkeeping failures and begun a program of 

remediation.  As set forth in the Undertakings below, LPL will retain an independent compliance 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  



3 

consultant to review and assess LPL’s remedial steps relating to its recordkeeping practices, 

policies and procedures, related supervisory practices, and employment actions. 

Respondent 

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

South Carolina, and has been registered with the Commission as a broker-dealer since 1973 and as 

an investment adviser since 1975.  It is a wholly owned indirect subsidiary of LPL Financial 

Holdings, Inc., headquartered in San Diego, California, and incorporated in Delaware. 

Recordkeeping Requirements under the Exchange and Advisers Acts 

8. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 

authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 

advisers to make and keep for prescribed periods, and furnish copies of, such records as 

necessary or appropriate in the public interest, for the protection of investors or, with respect to 

the Exchange Act, otherwise in furtherance of the purposes of the Exchange Act. 

9. The Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 

under the Advisers Act pursuant to this authority.  These rules specify the manner and length of 

time that the records created in accordance with Commission rules, and certain other records 

produced by broker-dealers or investment advisers, must be maintained and produced promptly 

to Commission representatives.   

10. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 

17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 

communications received and copies of all communications sent relating to the broker-dealer’s 

business as such.  These rules impose minimum recordkeeping requirements that are based on 

standards a prudent broker-dealer should follow in the normal course of business.  

11. The Commission previously has stated that these and other recordkeeping 

requirements “are an integral part of the investor protection function of the Commission, and 

other securities regulators, in that the preserved records are the primary means of monitoring 

compliance with applicable securities laws, including antifraud provisions and financial 

responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 

Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 

with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 

12. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 

204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of all 

communications received and copies of all written communications sent relating to, among other 

things: (a) any recommendation made or proposed to be made and any advice given or proposed to 

be given; (b) any receipt, disbursement or delivery of funds or securities; (c) the placing or 

execution of any order to purchase or sell any security; or (d) predecessor performance and the 

performance or rate of return of any or all managed accounts, portfolios, or securities 

recommendations. 



4 

LPL’s Policies and Procedures 

13. LPL maintained certain policies and procedures designed to ensure the retention 

of business-related records, including electronic communications, in compliance with the 

relevant recordkeeping provisions.  For example, since September 2019, LPL’s approved 

communications methods have included a texting application tool for communications between 

its personnel and clients or customers.  Despite the availability of this tool, during the Relevant 

Period, personnel sent and received business communications using unapproved communications 

methods. 

14. LPL personnel were advised that the use of unapproved electronic 

communications methods, including on their personal devices, was not permitted, and that they 

should not use personal email or unapproved chat or text messaging applications for business 

purposes. 

15. Messages sent through LPL’s approved communications methods were 

monitored, subject to review, and, when appropriate, archived.  Messages sent through 

unapproved communications methods, such as unapproved applications on personal devices, 

were not monitored, subject to review, or archived. 

16. LPL conducted trainings for its personnel which were designed to address the 

firm’s supervision of its personnel and adherence to LPL’s books and recordkeeping 

requirements.  The policies and related trainings notified personnel that electronic 

communications on approved platforms were subject to surveillance by LPL.  LPL also required 

from its personnel annual attestations of compliance with its policies and procedures regarding 

electronic communications. 

17. LPL, however, failed to implement a system of follow-up and review reasonably 

expected to determine whether personnel were following its policies.  While permitting its 

personnel to use approved communications methods, including on personal phones, for business 

communications, LPL failed to implement sufficient monitoring to ensure that its recordkeeping 

and communications policies were being followed. 

LPL’s Recordkeeping Failures Across Its Brokerage and Investment Advisory Businesses 

18. In October 2022, the Commission staff commenced a risk-based initiative to 

investigate whether investment advisers were properly maintaining communications that they 

were required to preserve as records under the Advisers Act.  LPL cooperated with the 

investigation by proactively gathering and reviewing communications from the personal devices 

of certain of its personnel and responding to the staff’s requests for additional information.  LPL 

also produced, at the request of the Commission staff, off-channel communications of a subset of 

these personnel relating to LPL’s investment advisory and brokerage businesses.  These 

personnel included financial advisors who, together with other personnel they supervised, were 

responsible for generating some of the highest levels of revenue for LPL during a time period 

within the Relevant Period.  Each of these IARs is a supervised person of LPL in its capacity 

both as an investment adviser and as a broker-dealer. 



5 

19. The Commission staff’s investigation found pervasive off-channel 

communications by LPL personnel.  Nearly all LPL personnel whose communications were 

reviewed in the course of the investigation had sent or received multiple off-channel 

communications that were records required to be preserved by LPL under the Advisers Act 

and/or Exchange Act.  These off-channel communications were sent among LPL personnel as 

well as to and from LPL clients and customers.  

20. The investigation found numerous off-channel communications that were records 

required to be preserved under the Exchange Act.  For example, an LPL registered representative 

sent a text message to a colleague concerning the execution of multiple trades in a brokerage 

account.   

21. Off-channel communications included records required to be preserved under the 

Advisers Act because they related to advisory recommendations made or proposed to be made or 

advice given or proposed to be given.  There are multiple examples of LPL IARs exchanging 

text messages relating to investment advice.   

22. Other off-channel communications were records required to be preserved under 

the Advisers Act because they related to the investment adviser’s receipt, disbursement or 

delivery of funds or securities.  For example, an LPL IAR and client exchanged multiple text 

messages concerning the receipt of additional funds by the investment adviser from the client. 

23. The investigation also found off-channel communications that were records 

required to be preserved under the Advisers Act because they related to the placing or execution of 

an order to purchase or sell securities.  For example, an LPL IAR exchanged multiple text 

messages regarding the placement of securities trades in a client account. 

LPL’s Failure to Preserve Required Records Potentially 

Compromised and Delayed Commission Matters 

24. During the Relevant Period, LPL received and responded to Commission 

subpoenas for documents and/or records requests in Commission investigations.  By failing to 

maintain and preserve required records relating to its businesses, LPL likely deprived the 

Commission of these off-channel communications in various investigations. 



6 

LPL’s Violations and Failure to Supervise 

25. As a result of the conduct described above, from at least June 2019 through the 

date of this Order, LPL willfully2 violated Section 17(a) of the Exchange Act and Rule 

17a-4(b)(4) thereunder.   

26. As a result of the conduct described above, from at least June 2019 through the 

date of this Order, LPL willfully violated Section 204 of the Advisers Act and Rule 204-2(a)(7) 

thereunder. 

27. As a result of the conduct described above, LPL failed reasonably to supervise its 

personnel, with a view to preventing or detecting certain of its supervised persons’ aiding and 

abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder, within 

the meaning of Section 15(b)(4)(E) of the Exchange Act.  

28. As a result of the conduct described above, LPL failed reasonably to supervise its 

personnel, with a view to preventing or detecting certain of its supervised persons’ aiding and 

abetting violations of Section 204 of the Advisers Act and Rule 204-2(a)(7) thereunder, within 

the meaning of Section 203(e)(6) of the Advisers Act. 

LPL’s Remedial Efforts 

29. In determining to accept the Offer, the Commission considered steps undertaken by 

LPL prior to and after being approached by Commission staff, including rolling out an on-channel 

texting application tool in September 2019 that facilitated compliant communications between 

LPL financial advisors who enrolled in that application tool and their clients and customers, as 

well as cooperation afforded the Commission staff. 

Undertakings 

30. Prior to this action, LPL enhanced its policies and procedures concerning the use 

of approved communications methods, including on personal devices.  In addition, LPL has 

undertaken to: 

31. Independent Compliance Consultant. 

a.  LPL shall retain, within thirty (30) days of the entry of this Order, the services 

of an independent compliance consultant (“Compliance Consultant”) that is not 

unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 

expenses shall be borne exclusively by LPL. 

 

b.  LPL will oversee the work of the Compliance Consultant. 

 

 
2  “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.’”  See 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)). 



7 

c.  LPL shall provide to the Commission staff, within sixty (60) days of the entry 

of this Order, a copy of the engagement letter detailing the Compliance Consultant’s 

responsibilities, which shall include a comprehensive compliance review as described 

below.  LPL shall require that, within ninety (90) days of the date of the engagement 

letter, the Compliance Consultant conduct: 

 

i.  A comprehensive review of LPL’s supervisory, compliance, and other 

policies and procedures designed to ensure that LPL’s electronic communications, 

including those found on personal electronic devices, including without 

limitation, cellular phones (“Personal Devices”), are preserved in accordance with 

the requirements of the federal securities laws. 

 

ii.  A comprehensive review of training conducted by LPL to ensure 

personnel are complying with the requirements regarding the preservation of 

electronic communications, including those found on Personal Devices, in 

accordance with the requirements of the federal securities laws, including by 

ensuring that LPL personnel certify in writing on a quarterly basis that they are 

complying with preservation requirements.  

 

iii.  An assessment of the surveillance program measures implemented by 

LPL to ensure compliance, on an ongoing basis, with the requirements found in 

the federal securities laws to preserve electronic communications, including those 

found on Personal Devices. 

 

iv.  An assessment of the technological solutions that LPL has begun 

implementing to meet the record retention requirements of the federal securities 

laws, including an assessment of the likelihood that LPL personnel will use the 

technological solutions going forward and a review of the measures employed by 

LPL to track personnel usage of new technological solutions.  

 

v.  An assessment of the measures used by LPL to prevent the use of 

unauthorized communications methods for business communications by its 

personnel.  This assessment should include, but not be limited to, a review of 

LPL’s policies and procedures to ascertain if they provide for any significant 

technology and/or behavioral restrictions that help prevent the risk of the use of 

unapproved communications methods on Personal Devices (e.g., trading floor 

restrictions).   

 

vi.  A review of LPL’s electronic communications surveillance routines to 

ensure that electronic communications through approved communications 

methods found on Personal Devices are incorporated into LPL’s overall 

communications surveillance program.   

 

vii.  A comprehensive review of the framework adopted by LPL to address 

instances of non-compliance by LPL personnel with LPL’s policies and 

procedures concerning the use of Personal Devices to communicate about LPL 



8 

business in the past.  This review shall include a survey of how LPL determined 

which personnel failed to comply with LPL policies and procedures, the 

corrective action carried out, an evaluation of who violated policies and why, 

what penalties were imposed, and whether penalties were handed out consistently 

across business lines and seniority levels.   

 

d.  LPL shall require that, within forty-five (45) days after completion of the 

review set forth in sub-paragraphs c.i. through c.vii. above, the Compliance Consultant 

shall submit a detailed written report of its findings to LPL and to the Commission staff 

(the “Report”).  LPL shall require that the Report include a description of the review 

performed, the names of the individuals who performed the review, the conclusions 

reached, the Compliance Consultant’s recommendations for changes in or improvements 

to LPL’s policies and procedures, and a summary of the plan for implementing the 

recommended changes in or improvements to LPL’s policies and procedures. 

 

e.  LPL shall adopt all recommendations contained in the Report within ninety 

(90) days of the date of the Report; provided, however, that within forty-five (45) days 

after the date of the Report, LPL shall advise the Compliance Consultant and the 

Commission staff in writing of any recommendations that LPL considers to be unduly 

burdensome, impractical, or inappropriate.  With respect to any recommendation that 

LPL considers unduly burdensome, impractical, or inappropriate, LPL need not adopt 

such recommendation at that time, but shall propose in writing an alternative policy, 

procedure, or disclosure designed to achieve the same objective or purpose. 

 

f.  As to any recommendation concerning LPL’s policies or procedures on which 

LPL and the Compliance Consultant do not agree, LPL and the Compliance Consultant 

shall attempt in good faith to reach an agreement within sixty (60) days after the date of 

the Report.  Within fifteen (15) days after the conclusion of the discussion and evaluation 

by LPL and the Compliance Consultant, LPL shall require that the Compliance 

Consultant inform LPL and the Commission staff in writing of the Compliance 

Consultant’s final determination concerning any recommendation that LPL considers to 

be unduly burdensome, impractical, or inappropriate.  LPL shall abide by the 

determinations of the Compliance Consultant and, within sixty (60) days after final 

agreement between LPL and the Compliance Consultant or final determination by the 

Compliance Consultant, whichever occurs first, LPL shall adopt and implement all of the 

recommendations that the Compliance Consultant deems appropriate. 

 

g.  LPL shall cooperate fully with the Compliance Consultant and shall provide 

the Compliance Consultant with access to such of LPL’s files, books, records, and 

personnel as are reasonably requested by the Compliance Consultant for review. 

 

h. LPL shall not have the authority to terminate the Compliance Consultant or 

substitute another compliance consultant for the initial Compliance Consultant, without 

the prior written approval of the Commission staff.  LPL shall compensate the 

Compliance Consultant and persons engaged to assist the Compliance Consultant for 

services rendered under this Order at their reasonable and customary rates. 



9 

 

i.  For the period of engagement and for a period of two (2) years from 

completion of the engagement, LPL shall not (i) retain the Compliance Consultant for 

any other professional services outside of the services described in this Order; (ii) enter 

into any other professional relationship with the Compliance Consultant, including any 

employment, consultant, attorney-client, auditing or other professional relationship; or 

(iii) enter, without prior written consent of the Commission staff, into any such 

professional relationship with any of the Compliance Consultant’s present or former 

affiliates, employers, directors, officers, employees, or agents acting in their capacity as 

such. 

 

j.  The Report by the Compliance Consultant will likely include confidential 

financial, proprietary, competitive business or commercial information.  Public disclosure 

of the Report could discourage cooperation, impede pending or potential government 

investigations or undermine the objectives of the reporting requirement.  For these 

reasons, among others, the Report and the contents thereof are intended to remain and 

shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 

in writing, (3) to the extent that the Commission determines in its sole discretion that 

disclosure would be in furtherance of the Commission’s discharge of its duties and 

responsibilities, or (4) as otherwise required by law. 

 

32. One-Year Evaluation.  LPL shall require the Compliance Consultant to assess 

LPL’s program for the preservation, as required under the federal securities laws, of electronic 

communications, including those found on Personal Devices, commencing one year after 

submitting the Report required by Paragraph 31.d above.  LPL shall require this review to 

evaluate LPL’s progress in the areas described in Paragraph 31.c.i-vii above.  After this review, 

LPL shall require the Compliance Consultant to submit a report (the “One Year Report”) to LPL 

and the Commission staff and shall ensure that the One Year Report includes an updated 

assessment of LPL’s policies and procedures with regard to the preservation of electronic 

communications (including those found on Personal Devices), training, surveillance programs, 

and technological solutions implemented in the prior year period.  

33. Reporting Discipline Imposed.  For two (2) years following the entry of this Order, 

LPL shall notify the Commission staff as follows upon the imposition of any discipline imposed by 

LPL, including, but not limited to: written warnings; loss of any pay, bonus, or incentive 

compensation; or the termination of employment or contract; with respect to any personnel found 

to have violated LPL’s policies and procedures concerning the preservation of electronic 

communications, including those found on Personal Devices:  at least forty-eight (48) hours before 

the filing of a Form U-5, or within ten (10) days of the imposition of other discipline.   

34. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 

the One Year Report, LPL will have its Internal Audit function conduct a separate audit(s) within 

one year of the issuance of the One Year Report to assess LPL’s progress in the areas described in 

Paragraph 31.c.i-vii above.  After completion of this audit(s), LPL shall ensure that Internal Audit 

submits a report to LPL and to the Commission staff. 



10 

35. Recordkeeping.  LPL shall preserve, for a period of not less than six (6) years 

from the end of the fiscal year last used, the first two (2) years in an easily accessible place, any 

record of compliance with these undertakings. 

36. Deadlines.  For good cause shown, the Commission staff may extend any of the 

procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 

calendar days, except that if the last day falls on a weekend or federal holiday, the next business 

day shall be considered to be the last day. 

37. Certification.  LPL shall certify, in writing, compliance with the undertakings set 

forth above.  The certification shall identify the undertakings, provide written evidence of 

compliance in the form of a narrative, and be supported by exhibits sufficient to demonstrate 

compliance.  The Commission staff may make reasonable requests for further evidence of 

compliance, and Respondent agrees to provide such evidence.  The certification and supporting 

material shall be submitted to Thomas P. Smith, Jr., Associate Regional Director, Division of 

Enforcement, Securities and Exchange Commission, New York Regional Office, 100 Pearl Street, 

Suite 20-100, New York, NY 10004, or such other person as the Commission staff may request, 

with a copy to the Office of Chief Counsel of the Enforcement Division, no later than sixty (60) 

days from the date of the completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondent’s Offer. 

 

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

203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 

 

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

future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 

B. Respondent cease and desist from committing or causing any violations and any 

future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 

C. Respondent is censured.  

 

D. Respondent shall comply with the undertakings enumerated in paragraphs 30 to 

37 above. 

  

 E. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $50,000,000 to the Securities and Exchange Commission for 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.   

 



11 

 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 the 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, New York 

Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004.  

 

  



12 

  

 

 F. 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.  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