Firm Settles Charges for Failing to Preserve Communications

A firm settled FINRA charges for failing to preserve and review over 1.25 million business-related electronic communications. FINRA said the communications included internal and external emails, instant messages and documents requiring customers' electronic signatures, as well as mass marketing emails sent to large distribution lists.

According to the AWC, the firm's supervisory system failed to address the use of four platforms where the communications were sent or how the firm would capture, preserve and review communications made through them. FINRA found that the firm's written supervisory procedures failed to identify: (i) that associated persons had access to these platforms; (ii) the circumstances under which associated persons could use these platforms for electronic communications; or (iii) how the firm would preserve and review communications made through these platforms. Additionally, FINRA found that the firm did not conduct any reviews of its system to preserve electronic communications sent or received through the four platforms. FINRA said that the firm had not established data feeds from the four platforms to the system that the firm used to store and maintain electronic communications.

FINRA found that the firm violated SEA Sections 17(a) ("Records and Reports") and 17a-4 ("Records to be Preserved by Certain Exchange Members, Brokers and Dealers"), NASD Rule 3010, and FINRA Rules 3110 ("Supervision"), 4511 ("General Requirements") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the firm agreed to (i) a censure, (ii) a $250,000 fine and (iii) an undertaking to certify in writing remediation of the issues.