San Diego-based LPL Financial has grown into the nation's fourth largest brokerage firm with 13,300 brokers, 6,500 offices and 4.3 million customers -- but "a growing list of problems with regulators," notes the New York Times in a story this morning (March 22). The state of Massachusetts has penalized the firm for its indiscriminate use of non-traded real estate investment trusts (REITs) -- illiquid investments that carry high commissions for brokers but have been losers for investors. (The Reader has followed LPL's Massachusetts problems, as well as the problems with non-traded REITs in connection with other firms.) The Times zeroes in on Montana, where 31 LPL brokers have been the subject of complaints over the last five years, but Merrill Lynch, which has 42 brokers in the state, has had none.

LPL gets in trouble because its brokers make higher commissions than do brokers of other firms, but it doesn't monitor those brokers sufficiently, says the Times. The firm says it is spending more money on compliance now.