LPL Stock Buyback Was Boon for 'Powerful Insider'

Remember that big stock buyback LPL Financial began late last year? The one that was going to "maximize shareholder returns?"

Not only did the buyback turn out to be a bust, but it also, as New York Times columnist Gretchen Morgenson pointed out in a front page story of the Sunday Business section, "primarily benefit[ed] a powerful insider investor."

That investor is TPG Capital, the private equity firm that has had a large stake in the nation's largest independent broker-dealer since 2005.

TPG did not respond to Morgenson’s request for comment and declined comment to Financial Planning.

'A VERY SWEET PRICE'

Instead of going into the open market to buy its own stock, Morgenson reports, LPL repurchased 4.3 million shares from TPG in December at an average cost of $44.50. The transaction, she pointed out, allowed TPG to "dispose of about one-third of its stake at what turned out to be a very sweet price."

Indeed it did. After last month's disastrous fourth-quarter and year-end results, LPL's stock sank to $16.50, and is now around $22 a share.

Read More:

• LPL Net Income Falls in 'Challenging' Fourth Quarter
• Seeking Share Price Boost, LPL Sets $500M Stock Buyback Plan
• LPL's HNW Push: Can it Work?