Nearly two years after acquiring three broker-dealers, LPL Financial Corp. has made the decision to move the entities within the company to ensure services are being delivered in the most cost-effective way.
LPL will integrate Associated Securities Corp., Mutual Service Corp. and Waterstone Financial Group Inc. into its organization. The three broker-dealers serve independent financial advisers. The integration process is expected to start immediately and, pending final approval by the Financial Industry Regulatory Authority, is expected to conclude by mid-September, the company said.
The 231 credit unions served by LPL will remain on the independent broker-dealer's platform or the UVEST Financial Services' platform, said Joseph Kuo, an LPL spokesman. The credit union industry is served by LPL Financial Institution Services division. In August 2007, LPL bought credit union-owned broker-dealer XCU Capital Corp.
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"We will maintain a relationship with Pershing LLC. Over 60% [of accounts] will remain with Pershing through UVEST. We hold [the firm] in high regard," said Dan Arnold, managing director and divisional president, institutional sales at LPL.
Arnold said LPL will "maintain our commitment" to credit unions.
"None of the company's financial institutions customers, including credit unions and community banks, among others, will be impacted by the integration of the Mutual Service Corp., Associated Securities and Waterstone Financial broker-dealers, which principally serve the independent financial advisor community," Kuo said.
LPL Financial is considered to be the nation's largest independent broker-dealers with $233.9 billion in assets under management and revenues of $3.1 billion as of 2008, according to the company. With offices in Boston, Charlotte, N.C., and San Diego, LPL and its affiliates serve 12,294 financial advisors and 780 financial institutions.
Since acquiring the three broker-dealers in 2007, LPL said it has been committed to enabling its affiliated advisers with the tools they need, including research, marketing, conferences and training.
"Their feedback confirms they want additional access to the full capabilities of our platform," said Bill Dwyer, president of national sales and marketing for LPL. "Today, the business opportunity for independent financial advisers has never been greater as investors search for objective and conflict-free advice, and we want to help our affiliated advisors to capitalize on this opportunity by offering them the full breadth of our platform as quickly as possible."
In January, LPL announced it would lay off 10% of its 3,000 employee roster. The job cuts do not affect LPL's financial institution services division, which serves credit unions, the company said at the time.
In September 2008, the SEC charged the broker-dealer with failing to adopt policies and procedures to safeguard 10,000 of its customers' personal information following a series of hacking incidents involving the broker-dealer's online trading platform, the commission said.
According to the SEC's order, LPL experienced multiple hacking incidents between July 2007 and early 2008 and unauthorized persons gained access to the online trading platform LPL provided for its registered representatives. The alleged perpetrators placed or attempted to place 209 unauthorized securities trades worth more than $700,000 combined in 68 customer accounts, the SEC said.
The SEC found that the firm conducted an internal audit in mid-2006 that identified inadequate security controls to safeguard customer information at its branch offices. LPL's audit specifically identified the risk from hacking. The commission said LPL failed to take timely corrective action because by the time the hacking incidents began in July 2007, the firm had not implemented increased security measures in response to the identified weaknesses.
LPL agreed to pay a $275,000 penalty to settle the SEC's enforcement action without admitting or denying the findings, according to the commission.
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