An early warning last week from LPL Financial Holdings Inc. that unexpectedly high regulatory costs would hurt third-quarter earnings failed to placate investors on Thursday, as shares tumbled after the brokerage firm reported actual results.

LPL Financial, the largest independent brokerage firm with almost 14,000 brokers that use its products and services, reported quarterly profit fell 11.6 percent from a year earlier. The results met Wall Street estimates on an adjusted basis.

LPL Financial said it is still spending heavily to overhaul risk management and regulatory systems, and cannot ensure it has reserved enough funds for future regulatory problems.

"It's a hard journey," Mark Casady, LPL Financial chairman and chief executive officer, told analysts and investors on a conference call. "I apologize to all shareholders for the bumpiness of the ride."

Shares of LPL Financial were off 4.3 percent to $40.78 on Thursday. the stock slid 6.6 percent on Oct. 22, when it said it would spend $23 million, instead of $5 million on regulatory costs.

The company expects $5 million of additional regulatory charges in the fourth quarter.

In the past 18 months, LPL Financial has paid more than $15 million in fines to state and federal regulators and reimbursements to clients, largely for improper sales of variable annuities, nontraded real estate investment trusts (REITs) and other alternative investments to unsophisticated investors.

Casady defended the products as "important" to "emerging affluent" consumers, saying non-traded REITs until recently gave middle-income consumers without pension plans yields comparable to pension plans. Variable annuities protect against inflation and market downturns, he said.

The processing and overseeing of sales of the products are much more prone to error because they are not as automated as sales of stocks, bonds and mutual funds, he said.

Casady estimated LPL Financial has completed about 60 percent of the work in fixing its processing, risk-management and sales oversight systems. The projects, including a 40 percent increase in legal and compliance staff, is consuming much of its operating expenses beyond what it is spending on fines and reimbursements.

"We are trying to be transparent as we make things better," Casady said, when asked on the call to elaborate on the reason for expected future fines. He demurred, when asked whether the worst of its regulatory problems and payments were past. "We are not able to predict ... where we are on that journey," he said.

Adjusted for restructuring projects and other one-time items LPL earned $48.7 million, or 48 cents a share, in line with analysts estimates compiled by Thomson Reuters I/B/E/S.

In a fillip to investors, LPL Financial spent $50 million in October to repurchase 1.1 million shares at an average price of $43.99 after paying $25 million on buybacks in the third quarter at an average of $47.06.

LPL Financial also declared a regular cash dividend of 24 cents a share.

Assets in client accounts grew 12.1 percent in the quarter to $464.8 billion, although revenue, which is stoked by those assets, was up just 3 percent. Casady cited falling interest rates that curtailed returns on client cash it invests and sales of more conventional products than REITs, which were popular last year.