Investing.com -- The Securities and Exchange Commission (SEC) has announced charges against broker-dealer and investment adviser LPL Financial LLC due to numerous failures in its anti-money laundering (AML) program. To settle the charges, LPL has agreed to pay an $18 million civil penalty and make enhancements to its AML procedures and policies.
The SEC order states that from May 2019 to December 2023, LPL had persistent issues with its customer identification program, including not closing accounts in a timely manner when it had not adequately verified the customer's identity. Additionally, LPL did not close or limit thousands of high-risk accounts, such as those related to cannabis and foreign accounts, which were not allowed under the company's AML policies.
Stacy Bogert, Associate Director of the SEC’s Division of Enforcement, emphasized that federal law compels broker-dealers to verify the identity of their customers and regularly conduct customer due diligence to assist the government in detecting and preventing money laundering. She added that when firms like LPL do not fulfill their AML obligations, they expose the securities markets to risk.
The SEC's order determined that LPL knowingly violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 under it. Without admitting or denying the SEC's findings, the firm consented to a censure and a cease-and-desist order, in addition to the $18 million penalty. The SEC order also instructs LPL to continue its collaboration with a compliance consultant to assess and propose modifications to the company's AML policies and procedures.
The SEC's investigation was led by Ada Fernandez Johnson and John Ponyicsanyi, and was overseen by Pei Y. Chung and Ms. Bogert.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.