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Another Big Regulatory Payout on LPL Horizon

LPL Financial's regulatory troubles aren't over.

The nation's biggest independent B-D announced that it expects to incur greater-than-expected charges of $23 million in its third quarter due to regulatory matters primarily involving the its systems, policies and procedures.

"Beginning in the last weeks of the third quarter, we made progress towards the resolution of certain regulatory matters that contributed to us taking a larger than expected charge," Mark Casady, LPL's chairman and CEO, says in a statement. "We are focused on completing the resolution of these matters in the coming quarters and look forward to deriving the full benefit of our investments in our enhanced compliance and risk management capabilities to minimize future risk."

The higher charges represent $18 million more than LPL anticipated for the third quarter, leading to an expected impact of $0.11 on diluted earnings per share, the company said.


This isn't the first time regulatory issues have hit LPL's bottom line.

Higher than anticipated regulatory costs and fines, along with increased operating expenses, contributed to a 4.4% drop in net income during the second quarter of this year. "We are not happy with these results," Casady said at the time during a conference call with Wall Street analysts.

Over the summer, the company was fined $2 million and ordered to pay $820,000 in restitution for failing to maintain adequate books and records documenting variable annuity exchanges, according to FINRA documents.

Net revenue for the third quarter is expected to be consistent with prior expectations, growing to approximately $1.1 billion, the LPL statement says. Due to the increased regulatory charges, LPL expects net income and diluted earnings per share to be in the range of $32 million to $34 million and $0.32 and $0.34 per share, respectively, for the third quarter.

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