LPL Financial has been fined $100,000 for failing to properly oversee one of its brokers in Oregon who sold risky investments to people, many of them elderly and without the mental capacity to make investment decisions.
The Oregon Division of Financial and Corporate Securities says LPL Financial, a division of LPL Investment Holdings Inc.,, has since improved it oversight procedures.
The fine stemmed from the actions of Jack Kleck, branch manager for LPL Financial in La Grande, Ore., who sold investments in high-risk oil and gas partnerships to nearly three dozen Oregon residents. Many of the investors were elderly and the investments were not suitable for the clientele, given their age and investment objectives, the division says.
The division found LPL Financial violated securities laws, including failing to diligently supervise the actions of its broker and failing to ensure company policies and procedures were enforced.
Kleck's securities license was revoked in 2007, barring him from doing business in Oregon, and a subsequent investigation led to the fine against LPL, says Melanie Mesaros, division spokeswoman. Kleck was fined $30,000.
Many of Kleck's clients were in their seventies and eighties and some were not capable, due to poor health, of making sound investment decisions, the division says.
“This case underscores the importance of investing with individuals and firms licensed by the state of Oregon,” says David Tatman, division administrator. “The state examines licensed brokerage firms and the division will take appropriate action against firms that do not comply with the law.”
LPL has taken numerous steps to improve its compliance and supervisory practices, the division says. The company has increased the number of employees devoted to compliance and supervision related functions, increased its pre-sale review of transactions and enhanced branch office examinations.
Michael Herley, LPL spokesman, says, “LPL Financial worked closely with the Division of Finance and Corporate Securities to resolve the matter, which was isolated and limited to one advisor. As a matter of practice, the firm always looks for opportunities to enhance the effectiveness of its compliance, supervisory and surveillance systems, and will continue to do so in the future.”
--Karen DeMasters
|
