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200+ NH Residents Eligible for Remediation Payments from Boston Firm
 
Published Thursday, May 4, 2017

The third-party investigator chosen by LPL Financial and approved by the NH Bureau of Securities Regulation completed its review of LPL’s non-traded REIT sales and determined that over 200 NH residents are eligible for remediation offers totaling over $8 million.

In December 2015, the Bureau entered into a Consent Order with LPL, a broker-dealer based in Boston, related to the sale of non-traded Real Estate Investment Trusts (REITs) to NH residents. REITs are highly risky real estate investment products that are not traded on any exchange with a very limited secondary market. Non-traded REITs also have significant front-end fees including high commissions for the selling broker. Due to the heightened risk associated with non-traded REITs, brokers are required to disclose these risks and to conduct a thorough analysis of the suitability of any non-traded REITs sale before any sale occurs.

During the course of its investigation, the Bureau determined that LPL sold hundreds of non-traded REITs to NH LPL clients based on erroneous client financial information and often in violation of LPL’s own policies regarding the permitted concentration of alternative investments, including REITs, in client accounts. Additionally, the Bureau determined that LPL’s data collection practices were unreliable resulting in numerous instances of inaccurate sales information and contributing to the unsuitable sale of non-traded REITs to NH investors.

Pursuant to this Consent Order, in addition to paying $750,000 in penalties and other relief, LPL was required to engage a third-party to review certain LPL non-traded REIT sales to NH residents to determine which sales violated either LPL guidelines or guidelines established by the non-traded REIT issuer. Any NH resident whose non-traded REIT purchase through LPL violated these guidelines would be entitled to remediation.

In the coming days, those individuals eligible for remediation should receive letters outlining the offer being made to them by LPL as well as terms for accepting the offer. Additionally, any current or former LPL client whose account was reviewed but who was determined not to be eligible for remediation will receive an explanatory letter from LPL.


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