Common use of Disciplinary Information Clause in Contracts

Disciplinary Information. ‌ As an investment advisor and broker-dealer regulated by the SEC, LPL was found by the SEC to have willfully violated Rule 30(a) of Regulation S-P, which requires broker-dealers and investment advisors to have written policies and procedures that are reasonably designed to safeguard customer records and information. The SEC ordered LPL to cease and desist from committing future violations of Rule 30(a), censured it for its conduct, and ordered it to pay the $275,000 penalty (2008). LPL, as a broker-dealer, is a member of FINRA and has found to be in violation of FINRA’s rules related to its brokerage activities. In particular, LPL consented to sanctions related to the following matters: • LPL’s various brokerage supervisory procedures, including those related to the sale of complex non-traditional ETFs, variable annuity contracts, REITs and other products in brokerage accounts, as well as LPL’s failure to monitor and report trades and deliver trade confirmations, resulting in a censure and fine of $10,000,000, and restitution of $1,664,592 (2015). • LPL’s processing and supervision of the sale of alternative investments, including non-traded real estate investment trusts, resulting in a censure and fine of $950,000 (2014). • LPL’s systems and procedures related to the review and retention of email, resulting in a censure, fine of $7.5 million, and establishment of a fund of $1.5 million to cover payments to eligible former brokerage customer claimants who may not have received all emails in connection with their claim (2013). • LPL’s supervisory systems to monitor and ensure the timely delivery of mutual fund prospectuses, resulting in a censure and fine of $400,000 (2012). • LPL’s procedures regarding its review of e-mail communications, resulting in a censure and fine of $100,000 (2011). • LPL’s procedures on transmittals of cash and securities from customer accounts to third party accounts, resulting in a censure and fine of $100,000 (2011). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $175,000 (2010). • Allegations that LPL failed to reasonably supervise a registered representative regarding his use of strategies and recommendations involving UITs, resulting in a censure and fine of $125,000 (2008). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $300,000 (2006). LPL, as a broker-dealer, is regulated by each of the 50 states and has been the subject to orders related to the violation of state laws and regulations in connection with its brokerage activities. As part of a global settlement with certain members of the North American Securities Administrators Association (NASAA), LPL submitted to consent orders with various state regulatory authorities regarding the sale in brokerage accounts of non-traded real estate investment trusts (REITs) in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an aggregate civil penalty of $1,425,000, reimbursement of certain investigative expenses and remediation of losses to impacted customers. Separately, LPL submitted to a consent order with the State of New Hampshire Bureau of Securities Regulation in connection with the sale of non-traded REITs in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an administrative fine of $250,000, reimbursement of investigative costs of $250,000, a $250,000 contribution to an investor education fund and remediation of losses to impacted customers. In 0000, XXX submitted to a consent order with the State of Delaware and an assurance of discontinuance with the Commonwealth of Massachusetts in connection with the sale of leveraged and inverse leveraged exchange-traded funds (“Leveraged ETFs”), resulting in an administrative fine of $50,000 (DE), a penalty of $200,000 (MA), restitution to Delaware customers in an amount up to $150,000, restitution to Massachusetts customers in an amount up to $1,600,000, and an agreement to make certain changes in its supervisory system with respect to Leveraged ETFs. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with findings that LPL failed to implement procedures related to the use of senior-specific titles by LPL representatives as required under Massachusetts law. LPL agreed to a censure and fine of $250,000. In 0000, XXX submitted to two consent orders with the Illinois Securities Department in connection with (i) findings that LPL failed to detect improper and fraudulent conduct by one of its IARs, resulting in a censure, fine of $500,000, and restitution to impacted customers; and (ii) certain variable annuity exchange transactions, in particular, relating to failure to adequately enforce supervisory procedures and maintain certain books and records required under Illinois law, resulting in a censure, fine of $2,000,000, and restitution to impacted customers. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with the sale of non-traded real estate investment trusts to Massachusetts residents in excess of Massachusetts concentration limits. LPL agreed to a censure, fine of $500,000, and restitution to impacted customers. For more information about those state events and other disciplinary and legal events involving LPL and its IARs, client should refer to Investment Advisor Public Disclosure at xxx.xxxxxxxxxxx.xxx.xxx or FINRA BrokerCheck at xxx.xxxxx.xxx.

Disciplinary Information. ‌ As an investment advisor and broker-dealer regulated by the SEC, LPL was has been subject to the following SEC orders: • The SEC found by the SEC to have that LPL willfully violated Rule 30(a) of Regulation S-P, which requires broker-dealers and registered investment advisors to have written policies and procedures that are reasonably designed to safeguard customer records and information. The SEC ordered LPL to cease and desist from committing future violations of Rule 30(a), censured it for its conduct, and ordered it to pay the $275,000 penalty (2008). • The SEC found that LPL willfully violated Section 17(a)(2) of the Securities Act of 1933 and Rule 10b-10 under the Securities Exchange Act of 1934 in connection with the SEC’s finding that LPL sold mutual fund shares as a broker- dealer without providing certain customers with breakpoint discounts. In connection with the SEC’s order, LPL agreed to pay a fine of $1,116,402 (2004). LPL, as a broker-dealer, is a member of FINRA the Financial Industry Regulatory Authority (“FINRA”) and has found to be in violation of FINRA’s rules related to its brokerage activities. In particular, LPL consented to the following sanctions related to the following matters: • LPL’s various brokerage supervisory procedures, including those related to the sale of complex non-traditional ETFs, variable annuity contracts, REITs and other products in brokerage accounts, as well as LPL’s failure to monitor and report trades and deliver trade confirmations, resulting in a censure and fine of $10,000,000, and restitution of $1,664,592 (2015). • LPL’s processing and supervision of the sale of alternative investments, including non-traded real estate investment trusts, resulting in a censure and fine of $950,000 (2014). • LPL’s systems and procedures related to the review and retention of email, resulting in a censure, fine of $7.5 million, and establishment of a fund of $1.5 million to cover payments to eligible former brokerage customer claimants who may not have received all emails in connection with their claim (2013). • LPL’s supervisory systems to monitor and ensure the timely delivery of mutual fund prospectuses, resulting in a censure and fine of $400,000 (2012). • LPL’s procedures regarding its review of e-mail communications, resulting in a censure and fine of $100,000 (2011). • LPL’s procedures on transmittals of cash and securities from customer accounts to third party accounts, resulting in a censure and fine of $100,000 (2011). • Allegations that LPL failed to ascertain the best inter-dealer market and buy or sell in such market so that the resulting price to customers was as favorable as possible under prevailing market conditions, resulting in a censure and fine of $20,000 (2011). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $175,000 (2010). • Allegations that LPL failed to reasonably supervise a registered representative regarding his use of strategies and recommendations involving UITs, resulting in a censure and fine of $125,000 (2008). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $300,000 (2006). • LPL’s procedures regarding mutual fund Class B and Class C shares, resulting in a censure and fine of $2,400,000 (2005). • LPL’s procedures on supervision activities of its registered representative in connection with wire transfers, resulting in a censure and fine of $75,000 (2005). • Allegations that LPL maintained revenue sharing programs in which mutual fund complexes paid a fee for preferential treatment, resulting in a censure and fine of $3,602,398 (2005). • Allegations regarding late filings to FINRA reporting obligations, resulting in a censure and fine of $450,000 (2004). • Allegations regarding failure to provide customers mutual fund breakpoint discounts, resulting in a censure and fine of $2,232,805 (2004). LPL, as a broker-dealer, is regulated by each of the 50 states and has been the subject to orders related to the violation of state laws and regulations in connection with its brokerage activities. As part of a global settlement with certain members of the North American Securities Administrators Association (NASAA)In particular, LPL submitted has been the subject to consent orders with various the following orders: • From the state regulatory authorities of Illinois regarding the sale in brokerage accounts of non-traded real estate investment trusts (REITs) in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an aggregate civil penalty of $1,425,000, reimbursement of certain investigative expenses and remediation of losses allegations that LPL failed to impacted customers. Separately, LPL submitted to reasonably supervise a consent order with the State of New Hampshire Bureau of Securities Regulation registered representative in connection with the sale of non-traded REITs in excess of prospectus standards, state concentration limits or LPL’s internal guidelinesoil and gas limited partnerships, resulting in an administrative a fine of $250,000, reimbursement 167,796 (2010). • From the state of investigative costs of $250,000, a $250,000 contribution to an investor education fund and remediation of losses to impacted customers. In 0000, XXX submitted to a consent order with the State of Delaware and an assurance of discontinuance with the Commonwealth of Massachusetts in connection with the sale of leveraged and inverse leveraged exchange-traded funds (“Leveraged ETFs”), resulting in an administrative fine of $50,000 (DE), a penalty of $200,000 (MA), restitution to Delaware customers in an amount up to $150,000, restitution to Massachusetts customers in an amount up to $1,600,000, and an agreement to make certain changes in its supervisory system with respect to Leveraged ETFs. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with findings Missouri regarding allegations that LPL failed to implement procedures related to supervise a registered representative in the use sale of senior-specific titles by LPL representatives as required under Massachusetts law. LPL agreed to a censure and variable annuity, resulting in a fine of $250,00037,540 (2010). In 0000, XXX submitted to two consent orders with • From the Illinois Securities Department in connection with (i) findings state of Montana regarding allegations that LPL failed to detect improper and fraudulent conduct by one of its IARssupervise a registered representative to ensure compliance with the Montana Securities Act, resulting in a censure, fine of $500,000, 150,000 (2009). • From the state of Pennsylvania regarding allegations that LPL failed to maintain and restitution to impacted customers; and (ii) certain variable annuity exchange transactions, in particular, relating to failure to adequately enforce supervisory procedures and maintain certain books and records required under Illinois lawfor supervision of one of its registered representatives, resulting in a censure, fine of $2,000,000, and restitution to impacted customers. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with the sale of non-traded real estate investment trusts to Massachusetts residents in excess of Massachusetts concentration limits. LPL agreed to a censure, fine of $500,000, and restitution to impacted customers230,000 (2007). For more information about those state events and other disciplinary and legal events involving LPL and its IARs, client should refer to Investment Advisor Public Disclosure at xxx.xxxxxxxxxxx.xxx.xxx or FINRA BrokerCheck at xxx.xxxxx.xxx.

Disciplinary Information. ‌ As an investment advisor and broker-dealer regulated by the SEC, LPL was found by the SEC to have willfully violated Rule 30(a) of Regulation S-P, which requires broker-dealers and investment advisors to have written policies and procedures that are reasonably designed to safeguard customer records and information. The SEC ordered LPL to cease and desist from committing future violations of Rule 30(a), censured it for its conduct, and ordered it to pay the a $275,000 penalty (2008). LPL, LPL as a broker-dealer, is a member of FINRA and has found to be in violation of FINRA’s rules related to its brokerage activities. In particular, LPL consented to sanctions related to the following matters: • The effectiveness of LPL’s anti-money laundering program, LPL’s failure to amend certain Forms U4 and U5, and LPL’s systems and supervisory procedures relating to Forms U4 and U5 reporting requirements, resulting in a censure and a fine of $2,750,000 and an undertaking to review the process used to disclose customer complaints on Forms U4 and U5 (2018). • LPL’s brokerage supervisory and disclosure procedures related to the sale of certain brokered certificates of deposit in brokerage accounts, resulting in a censure and a fine of $375,000 (2018). • LPL’s systems and supervisory procedures relating to the creation and distribution of certain required account notices, resulting in a censure, a fine of $900,000, and an undertaking to review affected processes (2016). • LPL’s systems and supervisory procedures relating to the format in which certain electronic records were retained, resulting in a censure and a fine of $750,000 (2016). • LPL’s various brokerage supervisory procedures, including those related to the sale of complex non-traditional ETFs, variable annuity (“VA”) contracts, REITs real estate investment trusts (“REITs”) and other products in brokerage accounts, as well as LPL’s failure to monitor and report trades and deliver trade confirmations, resulting in a censure and a fine of $10,000,000, and restitution of $1,664,592 (2015). • LPL’s processing and supervision of the sale of alternative investments, including non-traded real estate investment trustsREITs, resulting in a censure and a fine of $950,000 (2014). • LPL’s systems and procedures related to the review and retention of email, resulting in a censure, a fine of $7.5 million, and establishment of a fund of $1.5 million to cover payments to eligible former brokerage customer claimants who may not have received all emails in connection with their claim (2013). • LPL’s supervisory systems to monitor and ensure the timely delivery of mutual fund prospectuses, resulting in a censure and a fine of $400,000 (2012). • LPL’s procedures regarding its review of e-mail communications, resulting in a censure and a fine of $100,000 (2011). • LPL’s procedures on transmittals of cash and securities from customer accounts to third party accounts, resulting in a censure and a fine of $100,000 (2011). • LPL’s procedures on supervision of variable annuity VA exchanges, resulting in a censure and a fine of $175,000 (2010). • Allegations that LPL failed to reasonably supervise a registered representative regarding his use of strategies and recommendations involving UITs, resulting in a censure and a fine of $125,000 (2008). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $300,000 (2006). LPL, as a broker-dealer, is regulated by each of the 50 states and has been the subject to of orders related to the violation of state laws and regulations in connection with its brokerage activities. As part In particular, LPL entered into consent orders related to the following matters: • LPL’s brokerage supervisory procedures relating to email review and annual branch office examinations, resulting in a civil penalty of $450,000 and an undertaking for third-party review of related processes (Indiana, 2018). • The sale of unregistered, non-exempt securities in violation of state registration requirements, resulting (upon entry of the individual consent order) in payment to each participating state or jurisdiction of a global settlement civil penalty of $499,000, reimbursement of certain investigative expenses, remediation through repurchase of certain securities and payment of losses to certain affected customers, and certain additional undertakings (Settlement with certain up to 53 members of the North American Securities Administrators Association (NASAA), 2018). • The sale of non-traded alternative investments in excess of prospectus standards or LPL’s internal guidelines and the maintenance of related books and records, resulting in a censure, a fine of $950,000, a $25,000 contribution to an investor education fund and remediation of losses to impacted customers (New Jersey, 2017). • LPL’s supervisory practices for LPL submitted representatives located on the premises of a credit union, resulting in a censure, a fine of $1,000,000, and an undertaking to consent orders avoid investor confusion specific to the name under which the credit union does business and review LPL’s related policies and procedures (Massachusetts or “MA,” 2017). • LPL’s oversight of certain VA transactions, resulting in a censure, a fine of $975,000, restitution to clients and former clients of an LPL representative, disgorgement of commissions retained by LPL in connection with various state regulatory authorities regarding the such representative’s VA sales, and an undertaking to review such representative’s brokerage and advisory activities and LPL’s related policies and procedures (MA, 2017). • The sale in brokerage accounts of non-traded real estate investment trusts (REITs) REITs in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an aggregate civil penalty of $1,425,000, reimbursement of certain investigative expenses and remediation of losses to impacted customerscustomers (Global settlement with certain members of NASAA, 2015). Separately, LPL submitted to a consent order with the State of New Hampshire Bureau of Securities Regulation in connection with the • The sale of non-traded REITs in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an administrative fine of $250,000, reimbursement of investigative costs of $250,000, a $250,000 contribution to an investor education fund and remediation of losses to impacted customerscustomers (New Hampshire, 2015). In 0000, XXX submitted to a consent order with the State of Delaware and an assurance of discontinuance with the Commonwealth of Massachusetts in connection with the • The sale of leveraged and inverse leveraged exchange-traded funds ETFs (“Leveraged ETFs”), resulting in an administrative fine of $50,000 (DEDelaware), a penalty of $200,000 (MA), restitution to Delaware customers in an amount up to $150,000, restitution to Massachusetts MA customers in an amount up to $1,600,000, and an agreement to make certain changes in its supervisory system with respect to Leveraged ETFsETFs (2015). In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with findings that LPL failed • Failure to implement procedures related to the use of senior-specific titles by LPL representatives as required under Massachusetts MA law. LPL agreed to , resulting in a censure and a fine of $250,000250,000 (2015). In 0000, XXX submitted to two consent orders with the Illinois Securities Department in connection with (i) findings that LPL failed • Failure to detect improper and fraudulent conduct by one of its IARsan LPL representative, resulting in a censure, a fine of $500,000, and restitution to impacted customers; and (ii) certain variable annuity exchange transactions, in particular, relating to failure to adequately enforce supervisory procedures and maintain certain books and records required under Illinois lawlaw in connection with certain VA exchange transactions, resulting in a censure, a fine of $2,000,000, and restitution to impacted customerscustomers (2014). In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with the • The sale of non-traded real estate investment trusts REITs to Massachusetts MA residents in excess of Massachusetts MA concentration limits. LPL agreed to , resulting in a censure, a fine of $500,000, and restitution to impacted customerscustomers (2013). For more information about those state events and other disciplinary and legal events involving LPL and its IARs, client should refer to Investment Advisor Public Disclosure at xxx.xxxxxxxxxxx.xxx.xxx or FINRA BrokerCheck at xxx.xxxxx.xxx.

Disciplinary Information. ‌ As an investment advisor and broker-dealer regulated by the SEC, LPL was has been subject to the following SEC orders: • The SEC found by the SEC to have that LPL willfully violated Rule 30(a) of Regulation S-P, which requires broker-dealers and registered investment advisors to have written policies and procedures that are reasonably designed to safeguard customer records and information. The SEC ordered LPL to cease and desist from committing future violations of Rule 30(a), censured it for its conduct, and ordered it to pay the $275,000 penalty (2008). • The SEC found that LPL willfully violated Section 17(a)(2) of the Securities Act of 1933 and Rule 10b-10 under the Securities Exchange Act of 1934 in connection with the SEC’s finding that LPL sold mutual fund shares as a broker-dealer without providing certain customers with breakpoint discounts. In connection with the SEC’s order, LPL agreed to pay a fine of $1,116,402 (2004). LPL, as a broker-dealer, is a member of FINRA the Financial Industry Regulatory Authority (“FINRA”) and has found to be in violation of FINRA’s rules related to its brokerage activities. In particular, LPL consented to the following sanctions related to the following matters: • LPL’s various brokerage supervisory procedures, including those related to the sale of complex non-traditional ETFs, variable annuity contracts, REITs and other products in brokerage accounts, as well as LPL’s failure to monitor and report trades and deliver trade confirmations, resulting in a censure and fine of $10,000,000, and restitution of $1,664,592 (2015). • LPL’s processing and supervision of the sale of alternative investments, including non-traded real estate investment trusts, resulting in a censure and fine of $950,000 (2014). • LPL’s systems and procedures related to the review and retention of email, resulting in a censure, fine of $7.5 million, and establishment of a fund of $1.5 million to cover payments to eligible former brokerage customer claimants who may not have received all emails in connection with their claim (2013). • LPL’s supervisory systems to monitor and ensure the timely delivery of mutual fund prospectuses, resulting in a censure and fine of $400,000 (2012). • LPL’s procedures regarding its review of e-mail communications, resulting in a censure and fine of $100,000 (2011). • LPL’s procedures on transmittals of cash and securities from customer accounts to third party accounts, resulting in a censure and fine of $100,000 (2011). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $175,000 (2010). • Allegations that LPL failed to reasonably supervise a registered representative regarding his use of strategies and recommendations involving UITs, resulting in a censure and fine of $125,000 (2008). • LPL’s procedures on supervision of variable annuity exchanges, resulting in a censure and fine of $300,000 (2006). • LPL’s procedures regarding mutual fund Class B and Class C shares, resulting in a censure and fine of $2,400,000 (2005). • LPL’s procedures on supervision activities of its registered representative in connection with wire transfers, resulting in a censure and fine of $75,000 (2005). • Allegations that LPL maintained revenue sharing programs in which mutual fund complexes paid a fee for preferential treatment, resulting in a censure and fine of $3,602,398 (2005). • Allegations regarding late filings to FINRA reporting obligations, resulting in a censure and fine of $450,000 (2004). • Allegations regarding failure to provide customers mutual fund breakpoint discounts, resulting in a censure and fine of $2,232,805 (2004). LPL, as a broker-dealer, is regulated by each of the 50 states and has been the subject to orders related to the violation of state laws and regulations in connection with its brokerage activities. As part of a global settlement with certain members of the North American Securities Administrators Association (NASAA), LPL submitted to consent orders with various state regulatory authorities regarding the sale in brokerage accounts of non-traded real estate investment trusts (REITs) in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an aggregate civil penalty of $1,425,000, reimbursement of certain investigative expenses and remediation of losses to impacted customers. Separately, LPL submitted to a consent order with the State of New Hampshire Bureau of Securities Regulation in connection with the sale of non-traded REITs in excess of prospectus standards, state concentration limits or LPL’s internal guidelines, resulting in an administrative fine of $250,000, reimbursement of investigative costs of $250,000, a $250,000 contribution to an investor education fund and remediation of losses to impacted customers. In 0000, XXX submitted to a consent order with the State of Delaware and an assurance of discontinuance with the Commonwealth of Massachusetts in connection with the sale of leveraged and inverse leveraged exchange-traded funds (“Leveraged ETFs”), resulting in an administrative fine of $50,000 (DE), a penalty of $200,000 (MA), restitution to Delaware customers in an amount up to $150,000, restitution to Massachusetts customers in an amount up to $1,600,000, and an agreement to make certain changes in its supervisory system with respect to Leveraged ETFs. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with findings that LPL failed to implement procedures related to the use of senior-specific titles by LPL representatives as required under Massachusetts law. LPL agreed to a censure and fine of $250,000. In 0000, XXX submitted to two consent orders with the Illinois Securities Department in connection with (i) findings that LPL failed to detect improper and fraudulent conduct by one of its IARs, resulting in a censure, fine of $500,000, and restitution to impacted customers; and (ii) certain variable annuity exchange transactions, in particular, relating to failure to adequately enforce supervisory procedures and maintain certain books and records required under Illinois law, resulting in a censure, fine of $2,000,000, and restitution to impacted customers. In 0000, XXX submitted to a consent order with the Massachusetts Securities Division in connection with the sale of non-traded real estate investment trusts to Massachusetts residents in excess of Massachusetts concentration limits. LPL agreed to a censure, fine of $500,000, and restitution to impacted customers. For more information about those state events and other disciplinary and legal events involving LPL and its IARs, client should refer to Investment Advisor Public Disclosure at xxx.xxxxxxxxxxx.xxx.xxx or FINRA BrokerCheck at xxx.xxxxx.xxx.