LPLA 10-K & 10-Q changes, risk factors and insider trading

Many of our competitors have substantially greater resources than we do and may offer a broader range of services and financial products across more markets. Some of our competitors operate in a different regulatory environment than we do, which may give them certain competitive advantages in the services they offer. For example, certain of our competitors only provide clearing services and consequently would not have any supervision or oversight liability relating to actions of their financial advisors. We believe that competition within our industry will intensify as a result of consolidation and acquisition activity and because new competitors face few barriers to entry, which could adversely affect our ability to recruit new advisors and retain existing advisors. Additionally, we expect our current and future competitors to continue to invest in, develop and integrate new technologies, including artificial intelligence and machine learning solutions, to reduce costs associated with providing wealth management services. If we are unable to achieve similar cost reductions our business may become less competitive, which could make it more challenging to retain advisors on our platform or attract new advisors, which could have a material adverse effect on our business. In addition, while we believe that our business is well-positioned to take advantage of technological development, the perception that novel applications of technology could disrupt our business could cause the price of our common stock to fluctuate substantially and result in losses for our investors.

Our client cash programs generate a significant portion of our revenue. Our revenue from our client cash programs has declined in the past as a result of a low interest rate environment,environment and our revenue may decline in the future due to decreases in interest rates, decreases in client cash balances or mix shifts among the current or future deposit sweep vehicles, client cash account or money market accounts that we offer. Such a decline has occurred, and could occur inWhile the future. The Federal Reserve steadily increased its target federal funds rate in 2022 and 2023 to combat rising inflation, in 2024 and while we have experienced a sustained higher interest rate environment,2025, the Federal Reserve reduced its target federal funds rate was reduced in the second half of 2024,rate, with further reductions anticipated.possible. If the Federal Reserve continues to reduce its target federal funds rate from current levels, our revenue will be impacted.

Our revenue from our client cash programs also depends on our success in placing deposits and negotiating favorable terms in agreements with third-party banks and money market fund providers participating in our programs, as well as our success in offering competitive products, program fees and interest rates payable to clients. The expiration of contracts with favorable pricing terms, less favorable terms in future contracts, the inability to place deposits with third-party sweep banks, changes to regulatory rules or interpretations governing the fees we earn on cash sweep balances, or changes in client cash or money market accounts that we offer could result in declines in our revenue.

As is common in our industry, we have been subjected to and are currently subject to legal and regulatory proceedings arising out of our business operations, including lawsuits, arbitration claims, governmental subpoenas and regulatory, governmental and self-regulatory organization (“SRO”) inquiries, investigations and enforcement proceedings, as well as other actions and claims. Many of ourthese legal claims are initiated by clients of our advisors and involve the purchase or sale of investment securities, but other claims and proceedings may be, and have been, initiated by state-level and federal regulatory authorities and SROs, including the SEC, FINRA and state securities regulators, as well as clients of Independent RIAs.

In addition, the administration of client accounts involves operational processes such as recordkeeping and accounting, security pricing, corporate actions,actions and account reconciliations that are complex and rely on various tools and resources. Failure to properly perform operational tasks or errors in the design or function of these tools,tools could subject us to regulatory sanctions, penalties or litigation and result in reputational damage,damage and liability to clients.

We have transitioned2 certain business and technology processes to off-shore providers,off-shore, which has increased the related risks described above. For example, we rely on several off-shore service providers, operating in multiple locations, for functions related to cash management, account transfers, information technology infrastructure and support and document indexing, among others. In addition, we have limited international operations in Hyderabad, India. To the extent we or our third-party service providers are locatedoperate in foreign jurisdictions, we are exposed to risks inherent in such providers conducting business outside of the United States, including international economic and political conditions as well as natural disasters, and the additional costs associated with complying with foreign laws and fluctuations in currency values.

We have made acquisitions and investments and entered into strategic relationships in the past and plan to pursue further acquisitions, investments and strategic relationships in the future, including in connection with our institutioninstitutional services offering and Liquidity & Succession solution. These transactions are accompanied by risks. For instance, an acquisition could have a negative effect on our financial and strategic position and reputation, the synergies expected to result from a business combination could fail to materialize, or the acquired business could fail to further our strategic or financial goals.

We can provide no assurances that advisors who join LPL Financial through acquisitions or investments in advisor practices will remain at LPL Financial. Moreover, we may not be able to successfully integrate acquired businesses into ours, and therefore we may not be able to realize the intended benefits from an acquisition. For example, we may have a lack of experience in new markets, products or technologies brought on by the acquisition, we may have an initial dependence on unfamiliar supply or distribution partners, or the resources necessary to integrate an acquired business may exceed our expectations or the resources we have available. An acquisition may create an impairment of relationships with customers or suppliers of the acquired business or our advisors or suppliers. All of these and other potential risks could disrupt our existing business, as well as the businesses we seek to acquire, and could serve as a diversion of our management’s attention or other resources from other business concerns, and any of these factors could have a material adverse effect on our business. For more information about risks relating to updating our technology in connection with our business development opportunities, see “We rely on technology in our business, and technology and execution failures could subject us to losses, litigation and regulatory actions” below.

We have adopted policies, procedures and an overarching policy management framework to identify, monitor and manage our risks. These policies and procedures, however, may not be fully effective nor be adapted quickly enough to effectively respond to changing circumstances in our evolving business and regulatory environment. Various Company risk and compliance functions rely on information technology systems, information provided by third parties and publicly available information about markets, clients or other matters relevant to our business and operations. In some cases, however, that information may not be available, accurate, complete or up-to-date. Also, because many of our advisors work in decentralized or branch offices, additional risk management challenges exist, including advisor office technology, vendors and third party-providers,third-party-providers, supervision and oversight, business continuity, information security practices, and training and awareness. In addition, our existing systems, policies and procedures, and staffing levels may be insufficient to support a significant increase in our advisor population. Any such increase could require us to increase our costs, in order to maintain our risk management and compliance obligations, or strain our existing policies and procedures as we evolve to support a larger advisor population. If our systems, policies and procedures are not effective, or if we are not successful in identifying, monitoring, and managing the risks to which we are or may be exposed, we may suffer harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business and financial condition.

•guaranteeing indebtedness; and

•entering into agreements that restrict dividends or other payments from subsidiaries; andsubsidiaries.

Clients of our advisors have control over their assets that are served under our platforms. Poor service or performance of the financial products that we offer, the emergence of new financial products or services from others, harm to our reputation or competitive pressures on pricing of such services or products may result in the loss of clients. In addition, we must monitor the pricing of our services and financial products in relation to competitors and periodically may need to adjust commission and fee rates, interest rates on deposits and margin loans and other fee structures to remain competitive. Competition from other financial services firms, such as reduced or zero commissions to attract clients or trading volume, direct-to-investor online financial services, including so-called “robo” advice, wealth management services augmented by artificial intelligence, or higher deposit rates to attract client cash balances, could result in pricing pressure or otherwise adversely impact our business. The decrease in revenue that could result from such an event could have a material adverse effect on our business.

In addition, anotherAnother subsidiary, LPL Enterprise, is an introducing broker-dealer to LPL Financial. LPL Enterprise was created as part of our new business model that supports insurance companies and asset managersmanagers’ ability to provide financial services and expand their respective service capabilities. LPL Enterprise is:

•registered as an introducing broker-dealerbroker-dealers with the SEC, each of the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands;

•registered as an investment adviseradvisers with the SEC;

•a membermembers of FINRA; and

•subject to oversight by the DOL relative to itstheir servicing of retirement plan accounts subject to ERISA and the Code.

The primary SRO of LPL Financial’s andFinancial’s, LPL Enterprise’s and Commonwealth’s broker-dealer activity is FINRA, and the primary regulator of LPL Financial’s andFinancial’s, LPL Enterprise’s and Commonwealth’s investment advisory activity is the SEC. LPL Financial andFinancial, LPL Enterprise and Commonwealth are also subject to state laws, including state “blue sky” laws, and the rules of the Municipal Securities Rulemaking Board for its municipal securities activities. The CFTC has designated the NFA as LPL Financial’s primary regulator for futures and commodities trading activities.

Our ability to conduct business in the jurisdictions in which we currently operate depends on our compliance with the laws, rules and regulations promulgated by federal regulatory bodies and the regulatory authorities in each of the states and other jurisdictions in which we do business. Our ability to comply with all applicable laws, rules and regulations and interpretations is largely dependent on our establishment and maintenance of compliance, audit and reporting systems and procedures, as well as our ability to attract and retain qualified compliance, audit, supervisory and risk management personnel. We cannot assure you that our systems and procedures are, or have been, effective in complying with all applicable laws, rules and regulations and interpretations. In particular, the diversity of information security regulatory environments in which our services are offered makes it difficult to ensure a uniformly robust level of compliance. Regulators have in the past raised, and may in the future raise, concerns with respect to the quality, consistency or oversight of certain aspects of our compliance systems and programs and our past or future compliance with applicable laws, rules and regulations.

As of the date of this Annual Report on Form 10-K, we have a number of pending regulatory matters. For example, in August 2024, the Company received a request for information from the SEC regarding certain elements of the Company’s cash management program for corporate advisory accounts, which based on the nature of the request, we believe is part of an industry-wide inquiry. The Company has been cooperating with the request. For more information, see Note 14 - Commitments and Contingencies within the notes to the consolidated financial statements in this Annual Report on Form 10-K. In August 2024, the Company received a request for information from the SEC regarding certain elements of the Company’s cash management program for corporate advisory accounts. On January 23, 2026, the SEC informed us that it had concluded its investigation and did not intend to recommend an enforcement action.

New laws, rules and regulations, or changes to the interpretation or enforcement of existing laws, rules or regulations, could also result in limitations on the lines of business we conduct or plan to conduct, modifications to our current or future business practices, compressed margins, increased capital requirements and additional costs. The regulatory environment continues to evolve, with the potential to increase the complexity of operating our business. This includes overlapping state and federal rules and guidance that impose requirements on varying segments of our business, such as interpretations regarding standards of care. For example, the North American Securities Administrators Association (“NASAA”) has proposed a model conduct rule for broker-dealers for state securities regulators to review and propose for adoption as a statute. To the extent any state adopts such a rule and in the event the rule differs from the federal standard, we would be subject to various standards of care throughout multiple jurisdictions. These developments could negatively impact our results, including by increasing our expenditures related to legal, compliance, and information technology and could result in other costs, including greater risks of client lawsuits and enforcement activity by regulators. These changes may also affect the array of products and services we offer to clients and the compensation that we and our advisors receive in connection with such products and services.

The business activities that we may conduct are limited by various regulatory agencies. Our membership agreement with FINRA may be amended by application to include additional business activities,activities or a material change in business operations, as it was in 2024. This application process is time-consuming and may not be successful. As a result, we may be prevented from entering into or acquiring new potentially profitable businesses in a timely manner, or at all. In addition, as a member of FINRA, we are subject to certain regulations regarding changes in control. FINRA Rule 1017 generally provides, among other things, that FINRA approval must be obtained in connection with any transaction resulting in a 25% or more change in the ownership of a FINRA member that results in one person or entity directly or indirectly owning or controlling 25% or more of such member. Similarly, the OCC imposes advance approval requirements for a change of control, and control is presumed to exist if a person acquires 10% or more of our common stock. These regulatory approval processes can result in delay, increased costs or impose additional transaction terms in connection with a proposed change of control or material change in business operations of us or a FINRA member that we seek to acquire. As a result of these regulations, our future efforts to sell shares, raise additional capital or participate in acquisition activity may be delayed, prohibited or limited.

In addition, the SEC, FINRA, CFTC, OCC and NFA have extensive rules and regulations with respect to capital requirements. Our registered broker-dealer subsidiaries, including LPL Financial, are subject to Rulethe 15c3-1Uniform (“Net Capital Rule”) under the Exchange Act, and related requirements of SROs. The CFTC and NFA also impose net capital requirements. The Uniform Net Capital Rule specifies minimum capital requirements that are intended to ensure the general soundness and liquidity of broker-dealers. Because our holding companies are not registered broker-dealers, they are not subject to the Uniform Net Capital Rule. However, the ability of our holding companies to withdraw capital from our broker-dealer subsidiaries, including LPL Financial, could be restricted in the event they experience a net capital shortfall, which in turn could limit our ability to repay debt, redeem or repurchase shares of our outstanding stock or pay dividends. A large operating loss or charge against net capital could also adversely affect our ability to expand or maintain our present levels of business.

We continually update our technology platform with the goal of improving its reliability, resiliency, security and functionality, including in connection with regulatory requirements, acquisitions and strategic relationships. While we seek to implement these updates with no or limited interruption to our operations or the availability of our systems, we may not be successful and resulting interruptions could be widespread, lengthy, or both. Even if no interruption occurs, these updates may not result in the benefits to our systems that we contemplate. For example, we are upgrading our technology systems in connection with our current and future business development opportunities, pending acquisitions, investments and strategic relationships. These efforts involve a significant investment of financial and personnel resources and we cannot guarantee that these upgrades or the investments that support them will be completed successfully, on time or at all, or that they will not result in interruptions to the availability of our technology systems or business operations. More generally, our failure to upgrade our systems successfully could have a material adverse effect on our business, financial condition and results of operations, as well as our ability to achieve our growth objectives. For more information about risks related to upgrading our technology platform, see “Failure to maintain technological capabilities, flaws in existing technology, difficulties in upgrading our technology platform or the introduction of a competitive platform could have material adverse effect on our business” below.

Our operations rely on the secure processing, storage and transmission of confidential and other proprietary information in our computer systems and networks, including personally identifiable information of advisors and their clients, as well as our employees. Although we take protective measures and endeavor to strengthen the security and resiliency of these systems, our computer systems, software and networks are vulnerable to information breaches, unauthorized access, human error, computer viruses, denial-of-service attacks, malicious code, spam attacks, phishing, ransomware or other forms of social engineering and other events that could impact the security, reliability, confidentiality, integrity and availability of our systems (collectively, “Security Events”). To the extent third parties, such as product sponsors,sponsors and financial institutions, also retain similarly sensitive information about our advisors, their clients or our employees, their systems may face similar vulnerabilities that could result in Security Events for us. We are not able to protect against these Security Events completely given the rapid evolution of new vulnerabilities, the complex and distributed nature of our systems, our interdependence on the systems of other companies and the increased sophistication of potential attack vectors and methods against our systems. In particular, advisors work in a wide variety of environments, and although we require our advisors to maintain certain minimum security levels and adopt certain security procedures by policy, we cannot ensure the universal or consistent compliance with these policies across all of our advisors, or that our policy will be adequate to address the evolving threat environment. If one or more of these Security Events occur, they could jeopardize our own, our advisors’ or their clients’, or our counterparties’ confidential and other proprietary information processed, stored in and transmitted through our computer systems and networks, or otherwise cause interruptions or malfunctions in our own, our advisors’ or their clients’, our counterparties’, or third parties’ operations. As a result, we could be subject to litigation, client loss, reputational harm, regulatory sanctions and financial losses that are either not insured or are not fully covered through any insurance we maintain. If any person, including any of our employees or advisors, negligently disregards or intentionally breaches our established controls with respect to confidential client data or other confidential information or non-public personal information, or otherwise mismanages or misappropriates that data or information, we could also be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.

We currently, and may in the future,future use, develop,develop and incorporate systems and tools that leverage artificial intelligence and other machine learning and large language models, including generative artificial intelligence (collectively, “AI”), within our technology platform and services. The use of AI presentscould exacerbate existing risks or create new and challengesunpredictable thatrisks to our business, which could adversely impact ourthe business.markets in which we operate or subject us to increased competition and regulation. The development, adoption,adoption and application of AI technologies are still in their early stages, and ineffective or inadequate AI governance, development or deployment practices by us or by third-party developers or vendors could result in unintended consequences.consequences, and may not yield the benefits, insights and efficiencies that we or others anticipate. For example, AI algorithms that we use may be flawed or may be based on datasets that are biased or insufficient.insufficient Inand addition,could produce inaccurate, incomplete, or ineffective results, any of which could result in operational and reputational harm. While we aim to develop and use AI responsibly and attempt to identify and mitigate technological, ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving such issues before they arise. Any latency, disruption, or failure in our AI and related systems or infrastructure could result in delays or errors in our products and services.services that rely on AI. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs. There also may be real or perceived social harm, unfairness, or other outcomes that undermine public confidence in the use and deployment of AI. Further, our external third-party service providers may fail to use AI appropriately. Although we conduct diligence on our external service providers and, when appropriate, seek contractual protections from them to mitigate AI-related risks, we are not able to control how our advisors or external service providers develop, maintain or use their AI systems, nor do we have control over their use or disclosure of data with such AI systems, which can include material non-public information or personal identifiable information. Any of the foregoing may result in harm to our business, results of operations, or reputation.

The legal and regulatory landscape surrounding AI is rapidly evolving and remains uncertain, including in the areas of intellectual property, cybersecurity, privacy and data protection.protection, as well as consumer protection, competition and equal opportunity laws. For example, there is uncertainty around the validity and enforceability of intellectual property rights related to use, development and deployment of AI. Compliance with new or changing laws, regulations or industry standards relating to AI may impose significant operational costs and may limit our ability to use, develop, or deploy AI. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action or brand and reputational harm.

The secure and reliable transmission of confidential information, including financial account information and personally identifiable information, over public networks is a critical element of our operations. As part of our normal operations, we maintain and transmit confidential information about clients of our advisors, our advisors and our employees, as well as proprietary information relating to our business operations. The risks related to transmitting data and using service providers outside of and storing or processing data within our network are increasing based on escalating and complex malicious cyber activity, including activity that originates outside of the United States from criminal elements and hostileforeign nation-states.state actors.

Even though we monitor and seek to improve the security of our information technology systems, they remain vulnerable to security risks, and there can be no guarantee that they will not be subject to unauthorized access. We rely on our advisors and employees to comply with our policies and procedures and to implement controls to safeguard confidential data, but we remain exposed to the risk of malicious or negligent acts by insiders. The failure of our advisors and employees to comply with such policies and procedures, either intentionally or unintentionally, could result in the loss or wrongful use of their clients’ confidential information or other sensitive information, as well as result in aspectsinfiltration of our technologysystems, systemssystem malfunctioning, being disabledfailures or failingoutages toor workloss asof designed.confidential or proprietary information. In addition, even if we and our advisors comply with our policies and procedures, persons who circumvent security measures or bypass authentication controls could infiltrate or damage our systems or facilities and wrongfully use our confidential information or clients’ confidential information or cause interruptions or malfunctions in our operations. Cyber-attacks can be designed to collect information, manipulate, destroy or corrupt data, applications, accounts, or to disable the functioning or use of applications or technology assets. Such activity could, among other things:

We cannot be certain that our systems and networks will not be subject to successful attacks, despite the measures we have taken and may take in the future to address and mitigate cybersecurity, privacy and technology risks. Additionally, in the course of operations, we rely upon the technology systems of, and share sensitive proprietary information and personal data with, vendors, third parties and other financial institutions.institutions, and our off-shore subsidiary, some of which may store and process data off-shore. Storing data off-shore can lead to increased cybersecurity risks, as international jurisdictions have varying cybersecurity laws, regulations and practices which can result in lower security standards. Additionally, data being stored off-shore can mean that we and the third parties have reduced visibility and control over the security of the data. Transfers of personal data internationally can also trigger certain data protection legal requirements, including to ensure that safeguards are in place in relation to such transfers. We also rely upon software and data feeds from various third parties. Although we have a third partythird-party risk management program and conduct due diligence regarding cybersecurity and data protection practices before integrating our systems or sharing sensitive data with third-party vendors, this due diligence may not uncover administrative, technical or electronic gaps or flaws in their processes or systems. In the past, we and third parties on whose systems we rely have experienced Security Events that have resulted in the temporary interruption of our operations, breach notification costs and reputational harm with regulators, current and potential advisors, and advisors’ clients, and we may experience similar or more significant events in the future. Future Security Events involving individual and regulatory notifications could lead to litigation involving other financial institutions, class actions, regulatory investigations or other harm.harm, both financial and reputational.

Security Events within the financial services industry are increasing, and threat actors continue to find novel ways to attack technology platforms and services.services, including our information systems and those of our advisors and third-party vendors. The use of AI by malicious third parties may also increase the sophistication and effectiveness of cybersecurity attacks that we experience in the future. In light of the diversity of our advisors’ security environments and the increasing sophistication of malicious actors, a Security Event could occur and persist for an extended period of time without detection. We expect that any investigation of a Security Event could take substantial amounts of time, and that there may be extensive delays before we obtain full and reliable information and otherwise resume normal operations. In some cases, circumstances of a Security Event may be such that complete and reliable information about its cause, scope and nature may not be available as we attempt to respond to it. During such time we would not necessarily know the extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded before they are discovered and remediated, all of which would further increase the costs and consequences of such a Security Event.

Many aspects of our business are subject to comprehensive legal requirements concerning the collection, use and sharing of personal information, including advisor, client and employee information. This includes rules adopted pursuant to the Gramm-Leach-Bliley Act and an ever-increasing number of state laws and regulations, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act.Act and NYSDFS Part 500. Similar laws are in force in several other states, and other such laws willare expected to go into force over the next few years. This also includes the DOJ’s Data Security program that restricts, and in some cases prohibits, access by certain countries of concern or foreign entities to certain data, even if those data are de-identified, anonymized, or encrypted. We continue our efforts to safeguard the personal information entrusted to us in accordance with applicable law and our internal data protection policies, including taking steps to reduce the potential for the improper use or disclosure of personal information. We continue to monitor regulations related to data privacy and protection on both a domestic and international level to assess requirements and impacts on our business operations. The evolving patchwork of differing state and federal privacy and data security laws increases the cost and complexity of operating our business and our exposure to regulatory investigations, enforcement, fines, and penalties, any of which could negatively impact our business and operations. Failure to comply with these obligations could result in damage to our reputation and legal liability, censures, penalties and fines, disgorgement of profits, restitution to customers, remediation, the issuance of cease-and-desist orders, or injunctive or other equitable relief against us, as well as the need to continually invest significant management time and expense to improve compliance, which individually or in the aggregate could negatively impact our financial results or adversely affect our ability to attract or retain financial advisors and institutions. Depending on the nature of the violation, we may be required to offer restitution or remediation to customers, and the costs of doing so could exceed our loss reserves.

Our Board declared quarterly cash dividends on our outstanding common stock in 20242025 and has authorized us to repurchase shares of the Company’s issued and outstanding shares of common stock.stock; however, the Company paused share repurchases in early 2025 as a result of the Commonwealth acquisition. The declaration and payment of any future quarterly cash dividend or any additional repurchase authorizations will be subject to the Board’s continuing determination that the declaration of future dividends or repurchase of our shares are in the best interests of our stockholders and are in compliance with our Credit Agreement, the Indentures and applicable law. Such determinations will depend upon a number of factors that the Board deems relevant, including future earnings, the success of our business activities, capital requirements, alternative uses of capital, general economic, financial and business conditions, and the future prospects of our business.

Closed on the acquisition of AtriaCommonwealth WealthFinancial Solutions, Inc.Network

Completed offerings of $2.75 billion of debt refinancing and a $1.0$1.7 billion debtof offeringequity

On MayFebruary 20,26, 2024,2025, the Company completed the issuance and sale of $750.0 million in aggregate principal amount of 5.200% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 5.650% senior unsecured notes due 2035. On April 3, 2025, the Company completed the issuance and sale of $500.0 million in aggregate principal amount of 5.700%4.900% senior unsecured notes due 20272028, $500.0 million in aggregate principal amount of 5.150% senior unsecured notes due 2030 and $500.0 million in aggregate principal amount of 6.000%5.750% senior unsecured notes due 2034.2035. See Note 11 - Corporate Debt and Other Borrowings, Net,Net within the notes to the consolidated financial statements for furtheradditional detail.information.

(2)Consists of total advisory and brokerage assets under custody at the Company’s primary broker-dealer subsidiary, LPL Financial, as well as assets under custody of a third-party custodian related to CES and Atria’s seven introducing broker-dealer subsidiaries. Please consult the “Results of Operations” section for a tabular presentation of advisory and brokerage assets.

(87)The leverage ratio is a financial metric from our Credit Agreement and is calculated by dividing Credit Agreement net debt, which equals consolidated total debt less Corporate Cash, by Credit Agreement EBITDA. Credit Agreement EBITDA, a non-GAAP financial measure, is defined byin the Credit Agreement as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles, and is further adjusted to exclude certain non-cash charges and other adjustments, and to include future expected cost savings, operating expense reductions or other synergies from certain transactions. Please consult the “Debt and Related Covenants” section for more information. Below are reconciliations of corporate debt and other borrowings to Credit Agreement net debt as of the dates below and net income to EBITDA and Credit Agreement EBITDA for the periods presented (in millions):

(1110)EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is defined as net income plus interest expense on borrowings, provision for income taxes, depreciation and amortization, and amortization of other intangibles. Adjusted EBITDA is defined as EBITDA plus acquisition costs,costs excluding interest, certain regulatory charges, losses on extinguishment of debt, and amounts related to the departure of the Company’s former CEO. The Company presents EBITDA and adjusted EBITDA because management believes that they can be useful financial metrics in understanding the Company’s earnings from operations. EBITDA and adjusted EBITDA are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. Below is a reconciliation of net income to EBITDA and adjusted EBITDA for the periods presented (in millions):

(1211)Core G&A is a non-GAAP financial measure defined as total expense less the following expenses: advisory and commission; depreciation and amortization; interest expense on borrowings; amortization of other intangibles; brokerage, clearing and exchange; market fluctuations on employee deferred compensation; losses on extinguishment of debt; promotional (ongoing); regulatory charges; employee share-based compensation; acquisition costs excluding interest and acquisitiontransition costs.assistance loan amortization. Management presents core G&A because it believes core G&A reflects the corporate expense categories over which management can generally exercise a measure of control, compared with expense items over which management either cannot exercise control, such as advisory and commission expense, or which management views as promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company’s total expense as calculated in accordance with GAAP. Below is a reconciliation of the Company’s total expense to core G&A for the periods presented (in millions):

(1413)Acquisition costs and other for the twelve months ending December 31, 2025 and 2024 primarily include acquisition costs, costs incurred related to acquisitions and the integration of the strategic relationship with Prudential,Prudential. Acquisition costs and other for the twelve months ending December 31, 2024 also includes a $26.4 million reduction related to the departure of the Company’s former Chief Executive Officer and related clawback of share-based compensation awards, an $18.0 million regulatory charge recognizedrelated during the three months ended September 30, 2024 reflecting the amount ofto a penalty proposed by the SEC as part of its civil investigation of the Company’s compliance with certain elements of the Company’s AMLanti-money laundering compliance program, and a $40.0 million regulatory charge recognized during the three months ended September 30, 2023 to reflect the amount of a penalty proposed by the SEC as part of its civil investigation of the Company's compliance with records preservation requirements for business-related electronic communications stored on personal devices that have not been approved by the Company.program.

(1817)The departure of the Company’s former CEO resulted in other income of $26.4 million during the three months and year ended December 31, 2024 related to the clawback of share-based compensation awards, which was offset by share-based compensation expense of $12.0 million related to the modification of certain stock options that were retained as part of the settlement agreement that the Company reached with the former CEO. See Note 16 - Share-Based Compensation, Employee Incentives and Benefit Plans,Plans within the notes to the consolidated financial statements for additional information.

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Federal Reserve (“Fed”) policy. During the fourth quarter of 2024,2025, Fed policymakers reducedlowered the target range for the federal funds rate to 4.25%a range of 3.50% to 4.50%.3.75%. TheTo the extent they pursue faster easing in monetary policy, the Federal Open Market Committee members maywill continue to take into account the weakeningevolving jobeconomic market, the inflation trajectory,outlook and globalbalance financialof conditions as it evaluates whether to pursue faster easing in monetary policy. Please consult the “Risks Related to Our Business and Industry” section within Part I, “Item 1A. Risk Factors” for more information about the risks associated with significant interest rate changes and the potential related effects on our profitability and financial condition.risks.

Advisory revenue increased during the year ended December 31, 20242025 as compared to the same period in 2023.2024, Theprimarily due to assets and related revenue from the acquisition of Commonwealth, an increase during the year ended December 31, 2024 was primarily driven by continued organic growth, which increasedin advisory asset balances during the period, and an increase in therelated market impact as compared to the prior period.impacts.

Asset-based revenue for the year ended December 31, 20242025 increased by $120.0$498.2 million compared to 2023,2024, primarily due to an increase in other asset-based revenue, partially offset by a decrease in client cash revenue. Other asset-based revenue increased by $203.3$267.0 million compared to 20232024 primarily due to increases in asset balances in recordkeeping and sponsorship programs.program revenue. Client cash revenue for the year ended December 31, 20242025 decreasedincreased $83.3$231.3 million compared to 20232024 primarily due to lowerhigher average client cash balances. For the year ended December 31, 2024,2025, our average client cash balances decreasedincreased to $44.5$50.9 billion compared to $48.8$44.5 billion for the year ended December 31, 2023.2024.

Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, IRA custodian and other client account fees. We charge separate fees to RIAs on our Independent RIA advisory platform for technology, clearing, administrative, oversight and custody services, which may vary. We also host certain advisor conferences that serve as training, education, sales and marketing events for which we charge sponsors a fee. Service and fee revenue for the year ended December 31, 20242025 increased by $43.6$100.4 million compared to 2023,2024, primarily due to increases in IRA custodian fees, trading, licensing, andconference resource fees,services and error and omission insuranceregistration fees.

Transaction revenue includes transaction charges generated in both advisory and brokerage accounts from mutual funds, exchange-traded funds and fixed income products. Transaction revenue for the year ended December 31, 20242025 increased by $36.3$34.5 million compared to 2023,2024, primarily due to increases in the volumenumber of transactions forand structured products, partially offset by a decrease intransaction charges for managed assets.

Interest income is primarily generated from bank deposits, client margin loans, client cash account (“CCA”) balances segregated under federal or other regulations and advisor repayable loans. Interest income, net for the year ended December 31, 20242025 increased by $44.0 million compared to 2023,2024, primarily due to increasesinterest earned on overnight investment accounts driven by an increase in average daily balances of bank deposits, short-term U.S. treasury bills and margin loans.balances.

Other revenue primarily includes unrealized gains and losses on assets held by us in our advisor non-qualified deferred compensation plan and model research portfolios and other miscellaneous revenue, which is not generated from contracts with customers. Other revenue for the year ended December 31, 20242025 increased by $25.1$28.2 million compared to 2023,2024, primarily due to other income recognized as a result of the clawback of share-based compensation awards related to the departure of the Company’s former CEO. This increase was partially offset by a net decrease in realized and unrealized gains on assets held in our advisor non-qualified deferred compensation plan, which are based on the market performance of the underlying investment allocations chosen by advisors in the plan, and a related increaseincreases in dividend income on assets held in our advisor non-qualified deferred compensation plan.

Our payout rate increased for the year ended December 31, 20242025 compared to 2023,2024, primarily due to thehigher effectpayouts resulting from our acquisition of acquisitions during the yearCommonwealth and changesstrategic inrelationship productwith mix.Prudential.

Compensation and benefits expense includes salaries, wages, benefits, share-based compensation and related taxes for our employees, as well as compensation for temporary workers and contractors. The following table sets forth our average number of employees for the periods presented:

Compensation and benefits expense for the year ended December 31, 20242025 increased by $157.0$449.3 millionmillion, compared to 2023,2024, primarily due to acquisition related expenses incurred in conjunction with the Commonwealth transaction as well as an increase in headcount. See Note 4 - Acquisitions, within the notes to the consolidated financial statements for additional information.

Promotional expense includes business development costs related to advisor recruitment and retention, costs related to hosting certain advisory conferences that serve as training, sales and marketing events, and other costs that support advisor business growth. Promotional expense for the year ended December 31, 20242025 increased by $130.1$147.9 million compared to 2023,2024, primarily due to increases in large bank integration labor and increases in recruited assets and advisors that led to higher costs to support transition assistance and retention.retention, partially offset by decreases in large institutional onboarding costs.

Depreciation and amortization expense relates to the use of property and equipment, which includes internally developed software, hardware, leasehold improvements and other equipment. Depreciation and amortization expense for the year ended December 31, 20242025 increased by $61.5$84.9 million compared to 2023,2024, primarily due to our continued investment in technology to support the integrations, enhance our advisor platform and experience, and support onboarding of institutions.

Amortization of other intangibles represents the benefits received for the use of long-lived intangible assets established through our acquisitions. Amortization of other intangibles for the year ended December 31, 20242025 increased by $28.0$101.3 million compared to 2023,2024, primarily due to increases inadditional intangible assets resultingacquired fromduring acquisitions.the period. See Note 4 - Acquisitions and Note 9 - Goodwill and Other Intangibles, NetNet, within the notes to the consolidated financial statements for further detail.

Our effective income tax rate was 24.0%24.9% and 26.2%24.0% for the years ended December 31, 20242025 and 2023,2024, respectively. The decreaseincrease in our effective tax rate for the year ended December 31, 20242025 was primarily due to a reductiondecrease in non-deductible expenses, a release of uncertain tax positions and additional tax benefits for theshare-based vestingcompensation and exercisean ofincrease share-basedin compensation.reserves for uncertain tax positions. See Note 1413 - CommitmentsIncome and Contingencies,Taxes, within the notes to the consolidated financial statements for further detail.

Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements, Credit Agreement requirements, and internal capital thresholds. During the years ended December 31, 20242025 and 2023,2024, LPL Financial paid dividends of $460.0$1.2 millionbillion and $710.0$460.0 million to the Parent, respectively.

We believe Corporate Cash, a component of cash and equivalents, is a useful measure of the Parent’s liquidity as it represents the capital available for use in excess of the amount we are required to maintain pursuant to the Credit Agreement. Corporate Cash is the sum of cash and equivalents from the following: (1) cash and equivalents held at the Parent, (2) cash and equivalents held at regulated subsidiaries as defined by the Credit Agreement, which include LPL Financial, LPL Enterprise, PTCPTC, CES, and certain of Atria’s introducing broker-dealer subsidiaries, in excess of the capital requirements of the Credit Agreement and (3) cash and equivalents held at non-regulated subsidiaries.

Corporate Cash is monitored as part of our liquidity risk management strategy, and we target maintaining approximately $200 million inof Corporate Cash to meet our near-term corporate debt obligations. Corporate cash increased duringDuring the year ended December 31, 2024 primarily as a result of cash provided by operating activities and proceeds received from our $1.0 billion debt issuance in May 2024 offset by the repayment of balances outstanding on our senior unsecured revolving credit facility and the acquisition of Atria, which was funded by a combination of2024, Corporate Cash onalso handincluded andcash borrowingsheld underat ourcertain seniorof unsecuredAtria’s revolvingintroducing creditbroker-dealer facility.subsidiaries. See Note 4 - Acquisitions and, Note 11 - Corporate Debt and Other Borrowings, NetNet, and Note 15 - Stockholders’ Equity within the notes to the consolidated financial statements for additional information.

We engage in a share repurchase program that was approved by our Board, pursuant to which we may repurchase our issued and outstanding shares of common stock from time to time. Purchases may be effected in open market or privately negotiated transactions. Our current capital deployment framework remains focused on investing in organic growth first, pursuing acquisitions where appropriate and returning excess capital to stockholders. We paused share repurchases following the announcement of the Atria transaction in the first quarter of 2024 and resumed repurchases in the fourth quarter of 2024. The Company repurchased 605,361289,371 shares for a total of $170.0$100.0 million for the year ended December 31, 2024.2025. As of December 31, 20242025, we had $730.0$630.0 million remaining under our existing repurchase program. We paused share repurchases in anticipation of the Commonwealth acquisition. Given the closing of the transaction, we expect to evaluate resuming share repurchases, consistent with our existing capital management strategy. The timing and amount of share repurchases, if any, is determined at our discretion within the constraints of our Credit Agreement, applicable laws and consideration of our general liquidity needs. See Note 15 - Stockholders’ Equity, within the notes to the consolidated financial statements for additional information regarding our share repurchases.

Our subsidiaryother PTCregulated issubsidiaries, including LPL Enterprise, CES, and PTC, are also subject to various regulatory capital requirements. Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on PTC’sthese subsidiaries’ operations. As of December 31, 2025, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

Results for the firstsecond quarter of 2026 included net income of $356.4$379.3 million, or $4.43$4.74 per diluted share, which compares to net income of $318.6$273.2 million, or $4.24$3.40 per diluted share, for the firstsecond quarter of 2025.

Total advisory and brokerage assets served were $2.3$2.6 trillion at MarchJune 31,30, 2026, compared to $1.8$1.9 trillion at MarchJune 31,30, 2025. Total net new assets were $21.4$23.6 billion for the three months ended MarchJune 31,30, 2026, compared to $78.8$20.5 billion for the same period in 2025.

Net new advisory assets were $25.8$30.7 billion for the three months ended MarchJune 31,30, 2026, compared to $37.6$23.1 billion for the same period in 2025. Advisory assets were $1.4$1.5 trillion, or 59%60% of total advisory and brokerage assets served, at MarchJune 31,30, 2026, up 42%46% from $977.4$1.1 billiontrillion at MarchJune 31,30, 2025.

Net new brokerage assets were an outflow of $4.4$7.1 billion for the three months ended MarchJune 31,30, 2026, compared to an inflowoutflow of $41.2$2.6 billion for the same period in 2025. Brokerage assets were $945.9$1.0 trillion at June 30, 2026, up 18% from $858.5 billion at MarchJune 31, 2026, up 16% from $817.5 billion at March 31,30, 2025.

Gross profit, a non-GAAP financial measure, was $1.6 billion for the three months ended MarchJune 31,30, 2026, an increase of 25%24% from $1.3 billion for the three months ended MarchJune 31,30, 2025. See the “Key Performance Metrics” section for additional information on gross profit.

Common Stock Dividends and Share Repurchases

During the three months ended MarchJune 31,30, 2026, we paid stockholders cash dividends of $24.1$24.0 million and repurchased approximately 1.1 million of our outstanding shares for a total of $309.5 million.

(12)See the “Liquidity and Capital Resources” section for additional information about Corporate Cash. Corporate Cash at MarchJune 31,30, 2025 also includes certain of Atria's introducing broker-dealer subsidiaries.

(13)Acquisition costs and other for the twelve months ending June 30, 2026 and March 31, 2026 and December 31, 2025 primarily include costs related to acquisitions and the integration of the strategic relationship with Prudential Financial, Inc. Acquisition costs and other for the twelve months ending MarchJune 31,30, 2025 includes a $26.4 million reduction related to the departure of the Company’s former Chief Executive Officer, and an $18.0 million regulatory charge related to a penalty proposed by the SEC as part of its civil investigation of the Company’s compliance with certain elements of the Company’s anti-money laundering compliance program.

(14)M&A accretion is an adjustment to reflect the annualized expected run rate EBITDA of an acquisition as permitted by the Credit Agreement for up to eight fiscal quarters following the close of such acquisition. The increase in M&A accretion for the twelve months ending June 30, 2026 and March 31, 2026 and December 31, 2025 as compared to the twelve months ending MarchJune 31,30, 2025 was primarily related to the impact of acquisitions.

(16)Promotional (ongoing) for the three and six months ended MarchJune 31,30, 2026 and 2025 includes $16.9$13.5 million and $14.8$30.4 million, respectively, of support costs related to full-time employees that are classified within compensation and benefits expense in the condensed consolidated statements of income.income compared to $21.2 million and $36.0 million for the same periods in 2025. Promotional (ongoing) excludes costs that have been incurred as part of acquisitions, which are included in the Acquisition costs line item.

Our accruals, including those established through our captive insurance subsidiary at MarchJune 31,30, 2026, include estimated costs for significant regulatory matters or legal proceedings, generally relating to the adequacy of our compliance and supervisory systems and procedures and other controls, for which we believe losses are both probable and reasonably estimable.

Our business is directly and indirectly sensitive to several macroeconomic factors and the state of the financial markets in the United States. The equity markets fellrose during the firstsecond quarter of 2026, with the S&P 500 small cap index fallingrising 4.3%15.2% and Russell 2000 remainingrising relatively flat.21.2%.

Our business is also sensitive to current and expected short-term interest rates, which are largely driven by Federal Reserve (“Fed”) policy. During the firstsecond quarter of 2026, Fed policymakers maintained the target federal funds rate with a range of 3.50% to 3.75%. To the extent they pursue faster easing in monetary policy, the Federal Open Market Committee members will continue to take into account the evolving economic outlook and balance of risks.

The following discussion presents an analysis of our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Advisory revenue represents fees charged to advisors’ clients’ advisory accounts on our corporate registered investment adviser (“RIA”) advisory platform and is based on a percentage of the market value of the eligible assets in the clients’ advisory accounts. We provide ongoing investment advice and act as a custodian, providing brokerage and execution services on transactions, and perform administrative services for these accounts. Advisory fees are primarily billed to clients on a quarterly basis in advance, and are recognized as revenue ratably during the quarter. The performance obligation for advisory fees is considered a series of distinct services that are substantially the same and are satisfied daily. As the value of the eligible assets in an advisory account is susceptible to changes due to customer activity, this revenue includes variable consideration and is constrained until the date that the fees are determinable. The majority of these client accounts are on a calendar quarter and are billed using values as of the last business day of the preceding quarter. The value of the eligible assets in an advisory account on the billing date is adjusted for contributions and withdrawals during the period to determine the amount of revenue earned in the period. Advisory revenue collected on our corporate RIA advisory platform is proposed by the advisor and agreed to by the client and was approximately 1% of the underlying assets for the threesix months ended MarchJune 31,30, 2026.

Advisory revenue increased during the three and six months ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025 due primarily to an increase in advisory asset balances and related revenue from the acquisition of Commonwealth.

The increase in sales-based commission revenue for the three and six months ended MarchJune 31,30, 2026 compared to 2025 was primarily driven by an increase in sales of annuities. The increase in trailing commission revenue for the three and six months ended MarchJune 31,30, 2026 compared to 2025 was primarily due to continued growth in trail earning assets held by customers.customers and the acquisition of Commonwealth.

Asset-based revenue for the three and six months ended MarchJune 31,30, 2026 increased by $125.6$132.8 million and $258.4 million, respectively, compared to the same periodperiods in 2025 due to increases in client cash and other asset-based revenue. Other asset-based revenue for the three and six months ended MarchJune 31,30, 2026 increased compared to 2025 primarily due to increases in billable assets, recordkeeping and sponsorship program revenue. Client cash revenue for the three and six months ended MarchJune 31,30, 2026 increased compared to 2025 due to higher average client cash balances.balances during the three and six months ended June 30, 2026 as compared to 2025. For the three months ended MarchJune 31,30, 2026, our average client cash balances increased to $55.5$53.9 billion compared to $50.4$49.1 billion for the same period in 2025. For the six months ended June 30, 2026, our average client cash balances increased to $54.7 billion compared to $49.9 billion for the same period in 2025.

Service and fee revenue is generated from advisor and retail investor services, including technology, insurance, conferences, licensing, business services and planning and advice services, Individual Retirement Account (“IRA”) custodian and other client account fees. We charge separate fees to RIAs on our Independent RIA advisory platform for technology, clearing, administrative, oversight and custody services, which may vary. We also host certain advisor conferences that serve as training, education, sales and marketing events for which we charge sponsors a fee. Service and fee revenue for the three and six months ended MarchJune 31,30, 2026 increased compared to 2025, primarily due to increases inthe brokerage account fees.fees assessed on retirement and non-retirement clients.

Transaction revenue includes transaction charges generated in both advisory and brokerage accounts from mutual funds, exchange-traded funds and fixed income products. Transaction revenue for the three and six months ended MarchJune 31,30, 2026 increased compared to 2025, primarily due to increases in the number of transactions and transaction charges for managed assets.

Our payout rate for the three and six months ended MarchJune 31,30, 2026 increased compared to 2025, primarily due to changes in the mix of brokerage products and advisory platforms.

Compensation and benefits expense for the three and six months ended MarchJune 31,30, 2026 increased by $63.2$36.5 million and $99.7 million, respectively compared to 2025, primarily due to an increase in headcount.

Promotional expense includes business development costs related to advisor recruitment and retention, costs related to hosting certain advisory conferences that serve as training, sales and marketing events, and other costs that support advisor business growth. Promotional expense for the three and six months ended MarchJune 31,30, 2026 increased by $62.8$42.5 million and $105.2 million, respectively, compared to 2025, primarily due to increases in recruited assets and advisors that led to higher costs to support transition assistanceassistance, retention, training and retentioneducation, as well as trainingincreased andlegal education.expenses.

Occupancy and equipment expense includes the costs of leasing and maintaining our office spaces, software licensing and maintenance costs, and maintenance expense on computer hardware and other equipment. Occupancy and equipment expense for the three and six months ended MarchJune 31,30, 2026 increased by $41.3$44.1 million and $85.4 million, respectively, compared to 2025, primarily due to increased expense related to software licenses and our technology portfolio.

Depreciation and amortization expense relates to the use of property and equipment, which includes internally developed software, hardware, leasehold improvements and other equipment. Depreciation and amortization expense for the three and six months ended MarchJune 31,30, 2026 increased by $13.4$13.6 million and $27.0 million, respectively, compared to 2025, primarily due to our continued investment in technology to support integrations, enhance our advisor platform and experience, and support onboarding of institutions.

Interest expense on borrowings includes the interest associated with the Company’s senior notes, Term Loan A (“Term Loan A”) and revolving credit facilities; amortization of debt issuance costs; and fees associated with the Company’s revolving lines of credit. Interest expense on borrowings for the three months ended MarchJune 31,30, 2026 decreased by $4.1 million as compared to 2025, primarily due to lower interest rates on our Term Loan A. Interest expense on borrowings increased by $14.4$10.3 million for the six months ended June 30, 2026 as compared to 2025, primarily as a result of the issuance of $1.25 billion and $1.5 billion of senior unsecured notes in February 2025 and April 2025, respectively. See Note 9 - Corporate Debt and Other Borrowings, Net, within the notes to the condensed consolidated financial statements for additional information.

Amortization of other intangibles represents the benefits received for the use of long-lived intangible assets established through our acquisitions. Amortization of other intangibles for the three and six months ended MarchJune 31,30, 2026 increased by $23.7$24.8 million and $48.5 million, respectively, compared to 2025, primarily due to additional intangible assets acquired duringin the period.past year. See Note 4 - Acquisitions, within the notes to the condensed consolidated financial statements for additional information.

Brokerage, clearing and exchange expense includes expenses originating from trading or clearing operations as well as any exchange membership fees. These fees fluctuate largely in line with the volume of sales and trading activity. Brokerage, clearing and exchange expense for the three and six months ended MarchJune 31,30, 2026 increased by $11.3$8.7 million and $20.1 million, respectively, compared to 2025, primarily due to an increase in clearing charges.

Professional services expense includes costs paid to outside firms for assistance with legal, accounting, technology, regulatory, marketing, and general corporate matters, as well as non-capitalized costs related to service and technology enhancements. Professional services expense for the three and six months ended MarchJune 31,30, 2026 increased by $14.1$9.7 million and $23.7 million, respectively, compared to 2025, primarily due to technology enhancement projects and acquisition-related support.

Other expense includes licensing fees, insurance, broker-dealer regulatory fees, travel-related expenses, fair value adjustments to contingent consideration liabilities, the costs of the investigation, settlement and resolution of regulatory matters (including customer restitution and remediation), and other miscellaneous expenses. Other expense for the three and six months ended MarchJune 31,30, 2026 increased by $15.7$0.4 million and $16.1 million, respectively, compared to 2025, primarily due to increases in licensing fees, travel and events.

Our effective income tax rate was 26.5%26.4% and 23.6%25.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 26.4% and 24.7% for the six months ended June 30, 2026 and 2025, respectively. The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes, reserves for uncertain tax positions and non-deductible expenses. Our effective income tax rate is reduced by tax benefits received from income tax credits as well as share-based compensation vesting and exercises. The increase in our effective tax rate for the threesix months ended MarchJune 31,30, 2026 was primarily driven by lower share-based compensation tax benefits as compared to the prior year.

Dividends from and excess capital generated by LPL Financial are primarily generated through our cash flow from operations. Subject to regulatory approval or notification, capital generated by regulated subsidiaries can be distributed to the Parent to the extent the capital levels exceed regulatory requirements, Credit Agreement requirements and internal capital thresholds. During the threesix months ended MarchJune 31,30, 2026 and 2025, LPL Financial paid dividends of $210.0$485.0 million and $150.0 million to the Parent, respectively.

Corporate Cash is monitored as part of our liquidity risk management strategy. Corporate Cash increaseddecreased by $97.6$39.7 million during the threesix months ended MarchJune 31,30, 2026 as we continue our normal course of operations and reinvestments into the business.

We regularly evaluate our existing indebtedness, including potential issuances and refinancing opportunities, based on a number of factors, including our capital requirements, future prospects, contractual restrictions, the availability of refinancing on attractive terms and general market conditions. As of MarchJune 31,30, 2026, the earliest principal maturity date for our corporate debt with outstanding balances is in 2027 and our revolving credit facilities and uncommitted lines of credit mature between 2026 and 2029.

We engage in a share repurchase program that was approved by our Board, pursuant to which we may repurchase our issued and outstanding shares of common stock from time to time. Purchases may be effected in open market or privately negotiated transactions. Our current capital deployment framework remains focused on investing in organic growth first, pursuing acquisitions where appropriate and returning excess capital to stockholders. We repurchased 1.1 million shares for a total of $309.5 million during the six months ended June 30, 2026. As of MarchJune 31,30, 2026, the Companywe had $630.0$320.5 million remaining under our existing repurchase program. WeFrom hadJuly previously1, paused2026 sharethrough repurchasesJuly in30, anticipation of2026, the CommonwealthCompany acquisition; however, have resumed share repurchases in April 2026. We estimate that we will complete share repurchases of approximately $125 million during the second quarter of 2026 and havehas repurchased 214,652 of our420,464 outstanding shares for a total of $67.7$134.3 millionmillion. betweenOn AprilJuly 1,23, 20262026, the Board authorized a new repurchase program that increases the amount available for repurchases of the Company’s issued and Mayoutstanding 1,common 2026.shares by $2.5 billion. The timing and amount of share repurchases, if any, is determined at our discretion within the constraints of our Credit Agreement, applicable laws and consideration of our general liquidity needs. See Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds and Note 11 - Stockholders’ Equity, within the notes to the condensed consolidated financial statements for additional information regarding our share repurchases.

LPL Financial relies primarily on client payables to fund margin lending. LPL Financial maintains additional liquidity through external lines of credit totaling $1.2 billion at MarchJune 31,30, 2026, as well as two additional lines of credit with unspecified limits. LPL Financial also maintains a line of credit with the Parent.

The following table presents amounts outstanding and available under our external lines of credit at MarchJune 31,30, 2026 (in millions):

Our other regulated subsidiaries, including LPL Enterprise, Commonwealth’s introducing broker-dealer subsidiary, and PTC, are also subject to various regulatory capital requirements. Failure to meet the respective minimum capital requirements can result in certain mandatory and discretionary actions by regulators that, if undertaken, could have substantial monetary and non-monetary impacts on these subsidiaries’ operations. As of MarchJune 31,30, 2026, the Company’s other regulated subsidiaries met all capital adequacy requirements to which they were subject.

As of MarchJune 31,30, 2026, we were in compliance with our Credit Agreement financial covenants, which include a maximum Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) or “Leverage Ratio” and a minimum Consolidated EBITDA to Consolidated Interest Expense Ratio (as defined in the Credit Agreement) or “Interest Coverage.” The breach of these financial covenants would be subject to certain equity cure rights. The required ratios under our financial covenants and actual ratios were as follows:

During the threesix months ended MarchJune 31,30, 2026, there were no material changes in our contractual obligations, other than in the ordinary course of business, from those disclosed in our 2025 Annual Report on Form 10-K. See Note 4 - Acquisitions, Note 9 - Corporate Debt and Other Borrowings, Net and Note 10 - Commitments and Contingencies, within the notes to the condensed consolidated financial statements, as well as the Contractual Obligations section within Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report on Form 10-K, for further detail.

There were no new accounting pronouncements adopted during the threesix months ended MarchJune 31,30, 2026 that materially impacted the Company’s condensed consolidated financial statements and related disclosures.

(1)Service and fee revenue recognized over time includes revenue such as brokerage account maintenance fees, error and omission insurance fees, and IRA custodiantechnology fees.

The Company records unearned revenue when cash payments are received or due in advance of the Company’s performance obligations, including amounts which are refundable. Unearned revenue increased from $265.0 million as of December 31, 2025 to $324.1$329.2 million as of MarchJune 31,30, 2026. The increase in unearned revenue for the threesix months ended MarchJune 31,30, 2026 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations, partially offset by $264.1$264.3 million of revenue recognized during the threesix months ended MarchJune 31,30, 2026 that was included in the unearned revenue balance as of December 31, 2025.

During the threesix months ended MarchJune 31,30, 2026, the Company completed eight13 acquisitions, twofive of which have been accounted for as business combinations and sixeight of which have been accounted for as asset acquisitions.

The Company accounted for twofive acquisitions under the acquisition method of accounting for business combinations. Total consideration for these transactions was $82.9$151.3 million, which included $66.1$122.9 million of cash, and liabilities of $16.8$26.6 million for contingent consideration, which represents the acquisition date fair value of the additional cash consideration that may be transferred to the sellers if certain asset growth is achieved in the years following the closing. This contingent consideration may be settled for amounts of up to $50.5$68.5 million in the years following the closing. At March 31, 2026, the purchase accounting analysis is still ongoing and may result in changes to the value of intangibles assets and liabilities recorded. The Company had provisionally allocated $22.0 million of the consideration to client relationships, which were assigned useful lives of 14 years, $46.5 million to advisor relationships, which were assigned useful lives of 15 years, and $14.4 million to goodwill.

The Company accounted for six othereight acquisitions as asset acquisitions. These transactions included total initial consideration of $46.1$57.6 million, including $40.8$52.3 million which was allocated to client relationships and $5.3 million which was allocated to advisor relationships. These relationships were assigned useful lives of 14 years and 15 years, respectively, and the related transactions include potential contingent payments of up to $21.5$30.0 million in the years following the closing if certain asset growth is achieved. The Company has not recognized a liability for these contingent payments as the amounts to be paid will be uncertain until a future measurement date. Additionally, the Company recognized customer relationships of $22.8$34.5 million relating to cash paid for contingent consideration payments for asset acquisitions completed in prior periods for which the contingent period had ended in the current year. These customer relationships will be amortized over the remaining useful life of the asset that was initially recorded. See Note 7 - Goodwill and Other Intangibles, Net, for additional information.

(1)The Company recorded provisional purchase accounting adjustments during the six months ended June 30, 2026 which resulted in a $7.1 million increase in other liabilities and goodwill, respectively. The purchase accounting analysis is ongoing and may result in changes to consideration based on working capital and other adjustments and the value of certain assets acquired and liabilities recorded.

Acquisition related costs incurred as part of the Commonwealth acquisition during the three and six months ended MarchJune 31,30, 2026 were $13.3$17.1 million and $30.4 million, respectively, and primarily comprised amounts related to professional services, which were included in the Company's condensed consolidated statements of income.

There have been no transfers of assets or liabilities between these fair value measurement classifications during the threesix months ended MarchJune 31,30, 2026 or 2025.

The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of inputs used to determine the fair value at the measurement date. At MarchJune 31,30, 2026 and December 31, 2025, the Company had the following financial assets and liabilities that are measured at fair value on a recurring basis:

The Company uses prices obtained from independent third-party pricing services to measure the fair value of its trading securities. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. In general, these quoted prices are derived from active markets for identical assets or liabilities. When quoted prices in active markets for identical assets and liabilities are not available, the quoted prices are based on similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. For negotiable certificates of deposit and treasury securities, the Company utilizes market-based inputs, including observable market interest rates that correspond to the remaining maturities or the next interest reset dates. At MarchJune 31,30, 2026 and December 31, 2025, the Company did not adjust prices received from the independent third-party pricing services.

Fractional Shares — The Company’s investment in fractional shares held by customers is reflected in other assets while the related purchase obligation for such shares is reflected in other liabilities. The Company uses prices obtained from independent third-party pricing services to measure the fair value of its investment in fractional shares held by customers and the related repurchase obligation. Prices received from the pricing services are validated when security prices move beyond a certain deviation threshold using various methods including comparison to prices received from additional pricing services, comparison to available quoted market prices and review of other relevant market data including implied yields of major categories of securities. At MarchJune 31,30, 2026 and December 31, 2025, the Company did not adjust prices received from the independent third-party pricing services.