LPL Financial LLP ("LPL") will pay $9 million following a FINRA investigation of LPL's email system. Of that, $7.5 million will be paid as a fine for "35 separate, significant email system failures which prevented LPL from accessing hundreds of millions of emails and reviewing tens of millions of other emails," according to FINRA. FINRA also found that LPL made "material misstatements" to FINRA during its investigation of LPL's email handling. FINRA further ordered LPL to pay $1.5 million to establish a fund to compensate brokerage customer claimant who may have been affected by LPL's failure to produce email.
"This is the largest fine Finra has imposed for an e-mail case," said FINRA spokeswoman Michelle Ong.
In its investigation, FINRA found that from 2007 to 2013, LPL's email review and retention systems failed at least 35 times, which meant that LPL was unable to meet its obligations to capture email, supervise representatives and respond to regulatory requests. Some examples of LPL's 35 email failures include:
- Over a four-year period, LPL failed to supervise 28 million "doing business as" (DBA) emails sent and received by thousands of representatives who were operating as independent contractors.
- LPL failed to maintain access to hundreds of millions of emails during a transition to a less expensive email archive, and 80 million of those emails became corrupted.
- For seven years, LPL failed to keep and review 3.5 million Bloomberg messages.
- LPL failed to archive emails sent to customers through third-party email-based advertising platforms.