BD Allowed Reps to Retain Emails on Personal Computers
FINRA fined and censured a broker-dealer for allowing registered representatives to use personal email accounts for business-related and client communications. According to FINRA, the firm was aware of the use of personal accounts and allowed storage of email communications on personal computers even though the emails could be altered or deleted. Although the firm’s Written Supervisory Procedures required preapproval of client communications, the firm did not have access to the personal computers and, instead, relied on the “honor system” to monitor emails. FINRA charges that the firm did not have policies and procedures reasonably designed to comply with the securities laws.
OUR TAKE: Both broker-dealers and advisers must implement a robust email review and retention system. We recommend that firms utilize one of the commercially available packages that provide cost-effective, expedient, and compliant review and retention.