Securities fraud attorneys say LPL Financial LLC is facing another complaint regarding its sale of REITs to unsophisticated investors. The complaint was filed by the State of Montana Auditor’s Department and was reported in The New York Times and Investment News. LPL Financial faced the Montana Auditor’s Department last year as well for allegedly failing to properly supervise one of its brokers. Reportedly, the new case involves multiple brokers and questions how sophisticated the broader compliance efforts of LPL Financial are.
A spokesman for the Montana Auditor’s Department would not make comments regarding any investigation into LPL Financial but did confirm that the state has more complaints about LPL Financial’s advisers than other firms.
Stock fraud lawyers say this case follows a complaint filed against LPL Financial by the Massachusetts Securities Division, which alleged shortcomings in the firm’s compliance practices with respect to the sales of non-traded REITs, or real estate investment trusts. That complaint, which was filed in December of 2012, alleged that the firm did not adequately supervise its registered representatives in the sales of non-traded REITs, which violated the company’s rules and state limitations. In February, Massachusetts ordered LPL Financial to pay a fine of $500,000 and restitution to clients of up to $2 million.
With over 13,000 advisers and contractor representatives, LPL Financial is the United States’ biggest independent broker-dealer. Together with Ameriprise Financial Inc., LPL Financial accounts for around 20 percent of non-traded REIT sales, making it one of the two biggest sellers of non-traded real estate investment trusts. Meanwhile, securities fraud attorneys say that alternative investment commission revenue increased 25 percent in 2012, making these investments a significant revenue generator.
Financial Industry Regulatory Authority rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and that those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. In many cases, the recommendations of non-traded REITs to unsophisticated investors were unsuitable.
If you suffered significant losses in non-traded REITs sold by LPL Financial, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.