NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
The Firm permitted its registered representatives to use email to conduct business without having in place an effective system or procedure for email surveillance and archiving. Specifically, the firm relied on its registered representatives to electronically forward their emails to the firm’s chief compliance officer for supervisory review and archiving, while lacking any means to ensure that registered representatives were actually doing so. As such, the firm’s system and procedures for email surveillance and archiving were not reasonably designed to achieve compliance with SEC Rule 17a-4, and NASD Rules 3010(d)(2) and 3110. The Firm failed to preserve and maintain numerous securities-related and/or firm related emails that registered representatives had not forwarded to its chiefcompliance officer.
Investment Distributors, Inc. : Censured; Fined $80,000; Must certify in writing to FINRA that the firm has implemented a supervisory system, including written procedures, reasonably designed to achieve compliance with SEC Rule 17a-4 and NASD Rule 3110 with respect to the preservation and maintenance of email communications, and with NASD Rule 3010(d)(2) with respect to the supervisory review of email correspondence of registered representatives with the public.