Broker-Dealer Fined for Failing to Review Internal Communications

A broker-dealer settled charges with FINRA for failing to review internal communications.

In a Letter of Acceptance, Waiver and Consent ("AWC"), FINRA found that the broker-dealer failed to review approximately 3.5 million emails associated with numerous employees' email accounts. In addition, FINRA stated that the broker-dealer did not address red flags raised by employee email accounts missing from the firm's internal review queue. FINRA determined that the broker-dealer violated FINRA Rules 3110 ("Supervision"), specifically, Rules 3110a and b ("establishing and maintaining a written supervisory system"), Rule 3110(b)(4) ("Review of Correspondence and Internal Communications") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to (i) a censure, (ii) pay a $600,000 fine and (iii) comply with additional undertaking set forth in the AWC.