BDs Fined $1.2 Million for Failing to Retain/Review E-mails
An affiliated group of broker-dealers agreed to pay a $1.2 Million fine for failing to retain and review e-mails. FINRA alleges that the firms failed to review nearly 6 million e-mails that their systems flagged for supervisory review. According to FINRA, the firms’ systems’ default settings removed e-mails from the review queue after a certain period of time even if the e-mails had not been reviewed. FINRA also charges that the firms failed to properly archive e-mails housed on third party servers and failed to properly set up other accounts for review.
OUR TAKE: The sheer numbers involved here show how hard it is for firms to comply with the e-mail retention and review requirements. We believe the regulators should consider some bright line tests around e-mail reviews that make sense in an electronic world.