LPL Financial Observes Quiet Time After Filing Initial Public Stock Offering
With the recent filing with the SEC for an initial public stock offering by LPL Financial Corp., it remains to be seen what impact, if any, the move will have on the company's more than 230 credit union clients.
On June 4, LPL Financial, the parent company of LPL Investment Holdings Inc. filed a Form S-1 with the SEC for an offering that will consist of primary shares to be sold by LPL and secondary shares to be sold by some of its existing minority stockholders. The company said in a June 4 statement that it intends to use net proceeds from the proposed public offering for repaying debt, which totaled $1.4 billion as of March 31.
Meanwhile, LPL did not offer a comment on the impact of the initial public stock offering on its credit union clients.
"With the filing of its S-1 Registration Statement, LPL Financial is in a quiet period. Accordingly, we have no comment beyond our public filings," wrote Michael Herley, an LPL spokesman, in a June 7 statement to Credit Union Times.
Under LPL's certificate of corporation, the company said it has the authority to issue 600 million shares of capital stock valued at $1 per share, according to SEC filings. As of June 1, it had 94.24 million?shares of common stock outstanding held by 77?holders, including 7.42 million?shares of restricted common stock held by 1,070?advisers and 6,408 restricted shares held by three?nonexecutive directors. The offering will be made only by means of a prospectus, LPL said. A preliminary prospectus will then be available. While the offering has been filed with the SEC, it has not yet become effective. Securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective, LPL said.
LPL Financial is considered the country's largest independent broker-dealer with approximately 2,500 employees, 12,000 financial advisers, more than 750 financial institutions and nearly 4,000 institutional clearing and technology subscribers. It has offices in Boston, Charlotte, N.C., and San Diego.
In 2007, LPL bought Mutual Service Corp., Associated Securities Corp. and Waterstone Financial Group Inc. from Pacific Life, the three broker-dealers' former parent company. In August 2009, LPL integrated the three broker-dealers into its organization. The company's more than 230 credit unions remained on its platform or the UVEST Financial Services platform. LPL Financial and UVEST advisers, including all credit union-based advisers and their clients, would continue to have access to Pacific Life's products and its service teams.
On Nov. 20, LPL and its broker-dealer subsidiaries filed a joint complaint against Pacific Life for breach of indemnity provisions from the purchase agreement. LPL said Pacific Life agreed to indemnify LPL from any defense costs, awards and settlement judgments from investor claims taken out against the three broker-dealers before the acquisition deal was finalized. According to the suit, Pacific Life has amassed millions of dollars of settlement and defense costs related to claims from investors.
In two claims involving Associated Securities, LPL said in October, Pacific Life had not paid a $57,000 settlement, and in March the company initially did not pay an $8.4 million arbitration award, according to the suit. Pacific Life later paid the
settlement. In its June 4 SEC filing, LPL did not name the company, only describing it as a third-party indemnitor.