LPL Financial Holdings Inc

Table of Contents

LPL FINANCIAL HOLDINGS INC. AND SUBSIDIARIESNotes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 15 -FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK

AND CONCENTRATIONS OF CREDIT RISK

LPL Financial may offer loans to new and existing advisors and institutions to facilitate their relationship with LPL Financial, transition to LPL Financial’s platform or fund business development activities. LPL Financial may incur losses if advisors or institutions do not fulfill their obligations with respect to these loans. To mitigate this risk, LPL Financial evaluates the performance and creditworthiness of the advisor or institution prior to offering repayable loans.

LPL Financial’s client securities activities are transacted on either a cash or margin basis. In margin transactions, LPL Financial extends credit to the advisor’s client, subject to various regulatory and internal margin requirements, which is collateralized by cash and securities in the client’s account. As clients write options contracts or sell securities short, LPL Financial may incur losses if the clients do not fulfill their obligations and the collateral in the clients’ accounts is not sufficient to fully cover losses that clients may incur from these strategies. To control this risk, LPL Financial monitors margin levels daily and clients are required to deposit additional collateral, or reduce positions, when necessary.

LPL Financial is obligated to settle transactions with brokers and other financial institutions even if its advisors’ clients fail to meet their obligation to LPL Financial. Clients are required to complete their transactions on the settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, LPL Financial may incur losses. In addition, the Company occasionally enters into certain types of contracts to fulfill its sale of when-issued securities. When-issued securities have been authorized but are contingent upon the actual issuance of the security. LPL Financial has established procedures to reduce this risk by generally requiring that clients deposit cash or securities into their account prior to placing an order.

LPL Financial may at times hold equity securities on both a long and short basis that are recorded on the condensed consolidated statements of financial condition at market value. While long inventory positions represent LPL Financial’s ownership of securities, short inventory positions represent obligations of LPL Financial to deliver specified securities at a contracted price, which may differ from market prices prevailing at the time of completion of the transaction. Accordingly, both long and short inventory positions may result in losses or gains to LPL Financial as market values of securities fluctuate. To mitigate the risk of losses, long and short positions are marked-to-market daily and are continuously monitored by LPL Financial.

NOTE 16 -SUBSEQUENT EVENTS

On October 1, 2024, the Company announced that the Board had terminated Dan H. Arnold, President and Chief Executive Officer of the Company, for “Cause” as defined under the Company’s Executive Severance Plan and the Company’s 2010 Plan and 2021 Plan. On October 21, 2024, the Company announced that the Board had confirmed Rich Steinmeier as Chief Executive Officer and elected him to the Board. The Company also named Matt Audette as President and Chief Financial Officer.

The Board declared a cash dividend of $0.30 per share on LPLFH’s outstanding common stock to be paid on December 2, 2024 to all stockholders of record on November 14, 2024.