LPL Chairman and CEO Mark Casady to Take Early Retirement

LPL Financial chief executive Mark Casady at the firm’s Focus conference in August (via LPL Financial)

(Corrects details about Arnold’s background in the second paragraph and adds details on Putnam’s comments and compensation.)

Mark Casady, the chairman and chief executive of LPL Financial, will retire on January 3 after almost 15 years at the firm, the biggest independent brokerage firm in the U.S. said on Monday.

Casady, 56, will be replaced by Dan H. Arnold, 51, who joined the company seven years ago as part of its acquisition of Uvest Financial Services and has been president of LPL since March 2015. Casady, who received $5.7 million in compensation last year, according to filings, will remain in a non-executive chairman role until March 3 to assist Arnold in the transition, the company said.

Casady’s recent years at LPL, which sells compliance and product services to over 14,100 brokers, have been dominated by regulatory challenges. It has paid significant fines and penalties for failing to supervise sales of high-commission and sometimes unsuitable products and is preparing to transition brokers to operate under the Department of Labor’s fiduciary rule that requires them to put their customers’ best interests ahead of the own and takes effect on April 10, 2017.

While the fiduciary rule affects the entire U.S. brokerage industry on retirement accounts, the independent brokerage sector is particularly sensitive to the rule because it sells a larger proportion of high-commission annuities and direct investment products (such as privately traded real estate investment trusts) than do conventional firms.

In the latest example of it regulatory problems, the state of Massachusetts last week accused LPL of ignoring red flags about fraudulent sales of variable annuities by one of its top producers in the state.

Casady, a long-time mutual fund wholesaler who worked at Deutsche Asset Management, Americas and its Scudder Investments predecessor for eight years before joining LPL in 2002, has in recent years organized an expensive overhaul of the company’s regulatory systems and supervisory staff. That caused expenses to soar at the publicly held company, which has significant private equity ownership.

Pressure from some of those shareholders has prompted LPL to explore a sale, according to published reports.

But LPL’s lead board director, Jim Putnam, appeared to quash that rumor on Monday. “As we make this transition, we are in the midst of one our most successful recruiting years in LPL’s history,” he said in a prepared statement. “LPL’s scale and financial performance have equipped the firm to continue investing in the business and to respond decisively to opportunities as they arise. Against this backdrop, we have great confidence in our ability to thrive as an independent public company.”

LPL Financial’s stock was trading down over 3% at $39.70 as of 10:47 on Monday.