LPL and Former Broker Attract Class-Action Lawsuit
A pair of elderly customers of LPL Financial are battling the firm and their former broker over their right to bring a class-action lawsuit alleging churning and inflated mutual fund charges.
The former customers who live in Beaumont, Texas, seek more than $1 million in damages on behalf of “hundreds” of current and former clients of Jason N. Anderson, who was affiliated with the independent broker-dealer from 2007 until LPL fired him in January 2016, according to the lawsuit and Anderson’s BrokerCheck history.
LPL challenged the lawsuit, which was originally filed in county court in Jefferson County, Texas, last November, saying that the customers under terms of their account agreements are subject to mandatory arbitration rather than courthouse litigation. The case last week was transferred to federal court in the eastern district of Texas.
A class-action complaint is “superior to all other available methods” because it avoids a large number of individual complaints and allows those with small losses to recover damages without having to pay for litigation costs, lead plaintiffs Elijah Denson and Olan Weeks said in their initial filing.
The lawsuit alleges that LPL was negligent in failing to train and supervise Anderson. LPL fired Anderson in January 2016 for discretionary trading without authorization, according to his BrokerCheck history and to the lawsuit.
Denson and Weeks, each of whom are over 65, claim to have suffered a combined $630,000 loss in retirement accounts that were originally valued at $3.5 million.
“LPL knew (or should have known) Anderson had repeatedly engaged in such unlawful activity for quite some time,” they alleged.
Anderson, who briefly worked for two other firms after leaving LPL and is not currently registered with the Financial Industry Regulatory Authority, could not be reached for comment. His lawyer, Kelli B. Smith in Beaumont, did not respond to a call for comment.
A spokesman for LPL did not immediately return a request for comment.
Denson and Weeks have since moved their accounts from LPL to an unidentified firm, according to the complaint. They lawyer, Richard Coffman, did not respond to a request for comment.