Broker-Dealer Settles FINRA Charges for Failure to Supervise Representatives' Emails

A dually registered broker-dealer and investment adviser settled FINRA charges for failure to supervise its registered representatives' electronic communications.

According to the Acceptance, Waiver and Consent ("AWC"), the firm's procedures were inherently deficient in that they did not identify personnel responsible for reviewing emails, did not state how often reviews should be conducted and provided no reasonable guidance on how to conduct reviews or on what to do if there was a problem. As a result, FINRA said that the firm failed to "establish, maintain, and enforce a reasonable supervisory system" on the representatives' electronic communications in violation of Rule 3110(b)(4) ("Supervision: Review of Correspondence and Internal Communications") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a monetary fine of $25,000, (ii) a censure and (iii) an undertaking to review and enhance its supervisory systems.

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