LPL Fined for Selling Unsuitable Alternative Investments to Seniors


LPL Financial LLC was fined $100,000 by the Oregon Department of Consumer and Business Services for unsuitable sales of high-risk oil and gas partnerships to clients, including many who are elderly, in poor health, and incapable of making financial decisions (“LPL fined over sales of risky partnerships to seniors,” InvestmentNews).

Securities laws require brokerage firms and their representatives not to recommend an investment that is unsuitable in light of the investor’s investment objectives, risk tolerance and financial profile, which includes one’s age and ability to understand the nature and risks of the proposed investment. Brokerage firms also have a duty to investigate private (Reg D) investments, such as partnership interests (a process known as “due diligence”), and inform potential investors of all material risks associated with the investment.

Oregon found that the sales were unsuitable in light of the investors’ age and investment objectives, and that LPL failed to supervise its representative, Jack Kleck, who sold the securities to dozens of Oregon residents. Kleck operated out of LPL’s La Grande, Oregon office from 2000 to 2006.

In one instance, Kleck sold $40,000 of the oil and gas partnership and $45,000 in high-yield bonds to an 89-year-old client, who was, in Kleck’s words, “mentally lost” and “confused.”

After leaving LPL in 2006, Kleck was associated with Pacific West Securities Inc. for approximately four months. Oregon fined Kleck and revoked his license in 2007.
LPL Financial is the largest independent broker-dealer in the country, with about 12,800 associated registered representatives that are held out as investment advisors.

Page Perry is an Atlanta-based law firm with over 170 years collective experience representing investors in securities arbitration and litigation. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. Page Perry’s attorneys have extensive experience in representing investors in cases involving private (Reg D) investments. For further information, please contact us.