Massachusetts Securities Regulator: LPL Financial Allegedly Failing to Properly Supervise Annuity Sales

The Massachusetts Securities Division has recently filed an Administrative Enforcement Complaint against Roger S. Zullo, an LPL Financial, LLC ("LPL") advisor, and LPL itself alleging that "Zullo fabricated the financial suitability profiles of numerous LPL clients, selling them scores of large, illiquid, unsuitable, high-commission variable annuities, at substantial upfront profits to himself and LPL."  Most of the sales involve the Polaris Platinum III (B Shares) variable annuity.

In addition to targeting the conduct of Zullo himself, the Complaint paints a very detailed picture of a systemic failure on the part of LPL to adequately supervise the sale of variable annuities, opting instead to employ the use of a "paper-thin compliance review process" and "actively disregard[ing] ... countless warning signs and red flags" associated with the sales. Included among the allegations of the 84 page Administrative Enforcement Complaint, available for review here, are allegations that:

  • "LPL's process for annuity supervision is fundamentally flawed."
  • "LPL's review system for variable annuity sales was inherently unable to detect even careless advisory fraud."
  • "LPL's supervisors and analysts also failed to detect Zullo's fraud or question Zullo's nonsensical annuity justifications, even in cases where LPL's supervisory system ostensibly may have 'worked,' if actually followed.  For example, LPL supervisors approved annuity transactions with false information about client age and liquid net worth, even when such information was on record with LPL in various other formats, and should have been flagged via LPL's compliance review tools."
  • "LPL's complaint resolution procedure was nothing more than a self-serving pretense."

Over the past 15 years, Joel Ewusiak has assisted many customers, advisors, and brokerage firms in cases involving the sale of variable annuities.   If you have purchased or sold variable annuities through LPL and have questions about the transactions, please feel free to contact Joel via email ( or phone (727.286.3559) for a free, initial evaluation of your specific matter.