Lincoln Financial Fined $300K by FINRA for Unregistered Payments

Lincoln Financial Distributors Inc. was fined $300,000 by FINRA for violating compensation rules by making indirect payments to an unregistered entity between March 2018 and September 2019.

July 18, 2024

Lincoln Financial Distributors Inc., part of the Lincoln Financial Group, has been fined $300,000 by FINRA for making indirect payments to an unregistered entity, violating compensation rules.

Between March 2018 and September 2019, Lincoln Financial allegedly paid approximately $2.9 million in transaction-based compensation to an unregistered limited liability company. This entity, primarily owned by an unregistered insurance agent and partially by a registered representative from a broker-dealer, received a portion of $8.7 million in transaction-based compensation related to the sale of variable universal life insurance.

According to FINRA Rule 2040, member firms cannot pay compensation to unregistered individuals or entities that should be registered due to their activities. This also breaches FINRA Rule 2010, which requires members to maintain high standards of commercial honor and equitable principles.

Lincoln Financial accepted FINRA’s findings without admitting or denying the allegations.

Lincoln Financial Distributors markets and sells Lincoln-manufactured variable and fixed annuities, life insurance, and investment management products through financial advisers, intermediaries, and sales professionals. The company has over 1,000 registered representatives and eight branch offices.