LPL Ordered by FINRA to Pay Large Fine After Firing

The Financial Industry Regulatory Authority (FINRA) ordered LPL to make a “very substantial” payment for the firings of an office of supervisory jurisdiction (OSJ) manager and a compliance delegate. The individuals brought a $20 million claim against the firm. Brandon Marinelli and Meagan Donahue also won expungement of their records that occurred on February 16th, without LPL disclosing the exact amount. Another OSJ manager in October was seeking $30 million from the firm, which LPL did not have to pay. In the same month, a former UBS advisor who was terminated from the firm won $3 million in connection with his defamation claim. Marinelli and Donahue’s former practice, Northstar Wealth Partners, remains affiliated with LPL, and both argued that they were wrongfully terminated in March 2016.
An arbitrator wrote: “The record (including LPL’s internal documents) are remarkable in the lack of credible evidence showing wrongdoing by Donahue. It appears that Marinelli’s actions were consistent with his obligations and in the few ambiguous instances explicitly approved by LPL. At a minimum, LPL did not appear to engaged with Marinelli to examine in good faith Marinelli’s actions in regard to the events causing concern.” The firm asserted that Marinelli and Donahue failed to detect or report problematic annuity transactions by a representative under their supervision. Donahue claimed and testified, however, that the firm reviewed the transactions and found them acceptable after discussing them with the clients. Evidence produced in the case also showed that LPL had itself found that two loans by Marinelli to a representative were not violations of its policies and approved a representative’s holdings of certain penny stocks. The panel concluded that LPL fired the two individuals “at least in part” in order “to impede Marinelli and his business partner from moving Northstar’s book of business elsewhere.”
According to public records with FINRA, Marinelli is now registered with Raymond James in West Hartford, Connecticut, and has been since May 2016. He was previously registered with LPL in West Hartford from October 2008 until April 2016. Meagan Donahue was previously registered with LPL in West Hartford from June 2014 until April 2016, and is not currently registered with any member firm.