SEC Charges AR Capital

LPL Financial Advisors Under Investigation By SEC For Use of Personal Devices For Trades

LPL Financial informed the Securities and Exchange Commission on February 23 that it had been asked about whether their broker-adherence dealers adhered to industry standards for electronic communication using personal devices. This information was in a Report sent to the SEC.

LPL Financial’s annual audited Financial Statement, known as Focus Report, doesn’t specify whether personal devices refers to those of LPL Financial’s over 22,000 registered agents and investment advisers.

Unidentified financial advisor reported texting as a major issue at LPL’s autumn meeting.  “The SEC is keeping an eye on it.”

Advisors have returned to their jobs after the Covid-19 pandemic and restructured interactions with colleagues and clients. InvestmentNews reported that wealth management firms had started using unmonitored message applications.

For customer contact, advisors increasingly use messaging apps such as WhatsApp and email services such as Google. This trend may become more common as more customers access advisors via mobile devices.

We have been unable to get a hold of LPL Financial.

The term “personal device” This can be anything from a computer to an Apple Watch.

The October 2022 Focus Report is available. LPL Financial The SEC has contacted the company to inquire about their compliance record preservation requirements relating to business-related electronic communication stored on personal devices or messaging platforms they haven’t authorized.

LPL stated that in its filing, it would be willing to cooperate with any SEC investigation. However, the company could not estimate what losses might result from said inquiry.

Bloomberg News reported in May that SEC was conducting a groundbreaking investigation into secret messages on services like WhatsApp. They are looking for evidence on the mobile phones used by prominent traders and dealmakers.

In September, SEC and CFTC reached a settlement with more than a dozen financial institutions. The investigation was about the financial institutions’ failures to monitor worker communications using unauthorized messaging applications. Total cost of sanctions reached more than $2 billion.

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