Firm Settles FINRA Charges for "Taping Rule" Failures

A firm settled FINRA charges for supervisory failures regarding compliance with the FINRA Rule 3170 ("Taping Rule"), which requires broker-dealers with a history of regulatory issues to record and review all telephone conversations between their registered persons and customers.

FINRA said that, during the relevant period, the firm was subject to the rule.

FINRA found that the firm (i) had written procedures that lacked deadlines for supervisory reviews and gave no guidance on responding to red flags; (ii) allowed business calls on personal cell phones using a recording app, but left it upon to firm representatives to ensure compliance; (iii) failed to ensure calls were recorded, and found missing recordings for six representatives due to "human error and technical difficulties;" and (iv) failed to "retain call recordings for 18 days" because its carrier only stored calls for one year and no download policy was in place. 

As a result, FINRA determined that the firm violated FINRA rules 3170 ("Tape Recording of Registered Persons by Certain Firms") and 2010 ("Standards of Commercial Honor and Principles of Trade"). 

To settle the matter, the firm consented to (i) a censure and (ii) a $35,000 fine.