The Massachusetts Securities Division’s suit against LPL in December for unsuitable sales of nontraded real estate investment trusts has caused LPL to put the brakes on sales.
The good news for investors is that LPL informed its 13,000 registered reps that it will closely scrutinize the sales of leveraged, inverse and monthly reset mutual funds. LPL reps no longer will be able to source mutual funds directly from fund sponsors such as ProFund AdvisorsLLc or Rydex Funds. Instead, the orders must go through LPL’s broker-dealer, which enables the company to exercise more control to exercise such orders. Furthermore, as a result of the investigation, LPL changed its policies and procedures, and created a separate complex-products team to review all alternative products.
The question now is whether the heighted scrutiny will make a difference.