LPL Financial Holdings Inc. won a legal victory late last week when a federal judge on Friday dismissed a lawsuit that alleged the broker-dealer and top executives deceived investors before its stock price fell off a cliff in February 2016.

The matter is not completely resolved, as the judge, Barry Ted Moskowitz, gave the pension plan plaintiffs 45 days in which to file an amended complaint.

But the defendants, including LPL Financial Holdings and its former CEO, Mark Casady, were clearly sanguine with the development.

“We are pleased with the court’s decision in this matter,” wrote company spokesman, Jeff Mochal, in an email.

“I am pleased with the court’s decision in this matter,” said Mr. Casady, who retired as LPL’s CEO at the end of last year.

Tricia McCormick, an attorney for the Michigan pension plan, did not return a call Tuesday to comment.

Last March, a month after LPL shares dropped to all-time lows of $16.50, a Michigan pension plan, the Charter Township of Clinton Police and Fire Retirement System, filed the complaint in U.S. District Court in the Southern District of California, alleging that a 2015 stock buyback program cost the company, and ultimately its shareholders, $115 million. The complaint also named Matthew Audette, LPL’s chief financial officer.

When LPL announced the stock buyback program — $500 million in total — at the close of October 2015, company shares closed trading at $42.91. But about six weeks later, the stock began a decline, culminating in a one-day 35% plunge on Feb. 12 to $16.50 per share. This occurred after the company announced, the previous day, fourth-quarter earnings of 37 cents per share, well below analysts’ estimates of 51 cents per share.

The broad market was in a sell-off of stocks at the start of last year. LPL Financial Holdings shares have since recovered, and were trading at $46.40 on Tuesday afternoon.

The heart of the lawsuit focused on Mr. Casady’s and Mr. Audette’s positive comments about the company during a Dec. 8, 2015, financial services conference sponsored by Goldman Sachs. TPG Capital, which was one of the two private equity firms that bought a controlling stake in LPL in 2005, sold more than four million of its shares in late 2015 to LPL as part of the stock buyback program, raising the suspicions of the plaintiffs in the lawsuit.

For example, the complaint cited LPL’s statement that the share repurchase plan was the “best use” of the company’s capital because of the then-current price. Both Mr. Casady and Mr. Audette at the conference gave other positive assessments of LPL, according to the complaint, including that commission revenues were slow in the fourth quarter but would be similar to that of the third quarter. In fact, alternative investment revenues “would drop a staggering 75% year-over-year,” according to the complaint.

LPL, Mr. Casady and Mr. Audette filed their motion to dismiss the lawsuit this April.

“The defendants’ statements allegedly misrepresented, or failed to disclose, weaknesses in LPL’s financial performance as of the December 8th presentation,” Judge Moskowitz wrote in his decision. However, the lawsuit lacked specific financial details to support its allegations, he added.

“Without allegations quantifying LPL’s financial data as of December 8th, 2015, it is not possible to determine what defendants actually or constructively knew regarding LPL’s finances, or whether their ‘optimistic representations to the contrary’ were ‘consciously misleading,’” the judge wrote in the dismissal order.

The timing of LPL’s purchase of its shares from TPG did give him pause, however. Judge Moscowitz added that “the court agrees with the plaintiff that the timing of LPL’s buyback of shares from TPG is suspicious, particularly in light of its previous statement that the buyback would take months.”