LPL Financial Holdings Inc.
Robbins Arroyo LLP: LPL Financial Holdings, Inc. (LPLA) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against LPL Financial Holdings, Inc. (NASDAQGS: LPLA) in the U.S. District Court for the Southern District of California. The plaintiff brings the complaint on behalf of all purchasers of LPL Financial Holdings, Inc. (“LPL”) common stock between December 8, 2015 and February 11, 2016, for alleged violations of the Securities Exchange Act of 1934 by LPL’s officers and directors. LPL, together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors in the United States.
LPL Financial Accused of Misusing Company Capital
According to the complaint, following LPL’s Initial Public Offering (“IPO”) in November 2010, TPG Capital (“TPG”), a private equity firm, retained a substantial ownership stake in the company and influence over its affairs. On October 29, 2015, LPL announced that it would be implementing a $500 million share repurchase program. To pay for its share repurchase program, LPL took out additional loans, which increased its debt ratio, and put it at risk for breaching its revised credit covenants.
At a financial services conference on December 8, 2015, LPL stated that its earnings stream was steady, gross profits would decline only slightly on a sequential basis, and that its share repurchase plan was the best use of the company’s capital because of the then-current price of LPL’s common stock. However, the complaint alleges that these statements were misleading because quarterly adjusted earnings and net income were down, LPL would experience its worst sequential gross profit decline in four years, and LPL’s stock price was artificially inflated, making the share repurchase a wasteful and inefficient use of company capital. On December 10, 2015, LPL announced the early completion of its accelerated share repurchase program. TPG sold 4.3 million shares of LPL common stock at $43.27 per share, generating approximately $187 million in insider sales proceeds. On February 11, 2016, LPL announced disappointing fourth quarter and full year 2015 financial results that fell well below analyst’s estimates. On this news, LPL stock fell $8.67 per share, or 35%, to close at $16.50 per share on February 12, 2016.
LPL Financial Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.