Finra on Monday said it had fined LPL Financial $950,000 for supervisory lapses in the sale of direct investments.
 
In settling, LPL agreed to remedy the alleged failures and conduct a review of its compliance program and broker training.
 
The firm neither admitted nor denied Finra’s allegations.
 
Finra said LPL’s supervisory system failed to adequately catch concentration limits for illiquid products like non-traded REITs, oil and gas partnerships, business development companies, hedge funds and managed futures, for a period running from January 2008 through June 2012. In addition, the firm did not adequately train its supervisory staff to analyze various state suitability standards, Finra claimed.
 
“LPL is pleased to have resolved this matter following an investigation in which we cooperated fully,” said LPL spokeswoman Betsy Weinberger in a statement.
 
In 2012, LPL began a “rigorous review” of its supervisory policies, Weinberger added, and believes subsequent enhancements have strengthened oversight.
 
The case arose after a former broker at LPL, Gary Chackman, was charged with improper sale of alternative investments, Weinberger said.
 
In a separate case settled last December, Finra claimed that Chackman over concentrated alternative investments in at least eight customer accounts and falsified documents to evade supervision. Chackman agreed to a permanent bar from the industry.
 
Attempts to reach Chackman, who worked at LPL in Baltimore, Md., were not immediately successful.
 
Separately, early last year LPL agreed to pay a $500,000 fine and up to $2 million in restitution to Massachusetts investors after the state’s securities regulators charged the firm with improper sales of non-traded REITs.
 
Massachusetts regulators claimed they uncovered 569 transactions and nearly $27 million in REIT sales that did not meet suitability standards for liquid net worth, income and concentration limits.