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LPL Runs Afoul of Regulators Unusually Often

  • March 28, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Retirement, Seeking Prudent Advice

A New York Times article published last Friday tells the story of the 4th largest brokerage firm in America and its frequent run-ins with regulators.

Here are some key excerpts:

LPL Financial, has 13,300 brokers, 6,500 offices, 4.3 million customers — and a growing list of problems with regulators.

State and federal authorities have censured the company and its brokers with unusual frequency.

LPL brokers have been penalized for selling complex investments to unsophisticated investors, for speculative trading in customer accounts, and, in a few cases, for outright stealing from clients.

“LPL is on our radar screen more than any other firm,” said Lynne Egan, who oversees securities regulation in Montana.

Since the financial crisis hit in 2008, prominent firms like Merrill, which long catered to individual investors, have lost brokers and customers. Many investors have turned instead to independent brokerage firms like LPL. Unlike employees of the industry giants, LPL brokers are essentially contractors. They get LPL e-mail addresses and come under LPL compliance but pay for office space and staff.

LPL’s most serious case in Montana was resolved in 2009, when Donald Chouinard, an LPL broker in Kalispell, was sentenced to 10 years in prison for operating a Ponzi scheme. LPL paid Mr. Chouinard’s clients $1.3 million, and Ms. Egan’s office a $150,000 fine.

William F. Galvin, the Massachusetts secretary of the commonwealth, came to a $2.5 million settlement with LPL in February for selling the same product to investors in his state. Mr. Galvin said LPL had failed to properly examine who the products were being sold to, and had pushed the investments without mentioning that they provided big commissions to LPL and its brokers.

“What we really saw was a complete lack of supervision,” Mr. Galvin said.

 


2012 IRA Contribution Reminder

  • March 21, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Retirement

Here’s an important reminder if you have an individual retirement account (IRA) or are considering opening an IRA.

2012 contributions to your IRA accounts can still be made up through April 15, 2013.

IRA Contribution Limits for 2012*

Traditional/IRA Rollover: $5,000 ($6,000 if you are 50 years old or older)
Roth IRA: $5,000 ($6,000 if you are 50 years old or older)
SIMPLE IRA: $11,500 ($14,000 if you are 50 years old or older)
SEP IRA: $50,000

*Note: The maximum contribution limit is affected by your taxable compensation for the year. Refer to IRS Publication 590 for full details.

 


Money Lessons From “Downton Abbey”

  • March 14, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Behavior, Seeking Prudent Advice

We’re big fans of “Downton Abbey”, the television show that follows an aristocratic British family in the early decades of the 20th century.

Over the three seasons that the show has graced PBS’ “Masterpiece”, a number of money lessons have been showcased — mostly what NOT to do!

For example, don’t bet the family fortune on a railroad thousands of miles away (i.e., massive lack of diversification).  A professional advisor working in concert with the Earl of Grantham probably would have prevented him from concentrating so much capital in a Canadian railway!

Downton’s money lessons include financial and estate-planning disasters, bad investments, messy trusts, and inadequate business succession plans.

Here are some key takeaways and tie-ins:

  • Spell out control and ownership when passing the baton of a family company
    (the generational transfer of Downton Abbey from Robert to Matthew)
  • Use trusts to protect the family fortune
    (to protect Robert Crawley’s from his own poor decisions)
  • Make a will before giving birth
    (think of Matthew Crawley’s untimely demise)
  • Set up a medical directive
    (the terrible struggle of how to handle Sybil in childbirth)

We can’t wait for more Dowton Abbey and money lessons in season four!

 


Dow at All-Time High: What Has Changed?

  • March 7, 2013/
  • Posted By : admin/
  • 0 comments /
  • Under : Economy, Market Outlook

Click for larger view

The Dow climbed to 14253.77 on Tuesday to set a new all-time high. The economic landscape has changed a great deal since the previous record was set in October 2007:

  • GDP Growth: Then +2.5%; Now +1.6%
  • Unemployed: Then 6.7 million; Now 13.2 million
  • Food Stamp users: Then 26.9 million; Now 47.69 million
  • Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • Total US Debt: Then $9.008 trillion; Now $16.43 trillion
  • Consumer Confidence: Then 99.5; Now 69.6
  • VIX: Then 17.5%; Now 14%
  • 10 Year Treasury Yield: Then 4.64%; Now 1.89%
  • Gold: Then $748; Now $1583
  • NYSE Average daily volume: Then 1.3 billion shares; Now 545 million shares

Source: WSJ


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FROM OUR BLOG
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