According to a release published by the Financial Industry Regulatory Authority (FINRA) on December 21, 2017, FINRA has sanctioned broker-dealer firm Raymond James Financial Services $2 million in connection to the firm’s alleged supervisory failures. Fitapelli Kurta is interested in speaking to investors who have complaints regarding investments made with Raymond James Financial Services.
FINRA’s findings state that during a nine-year period, Raymond James’ system for reviewing email communications suffered from significant flaws and allowed “millions of emails to evade meaningful review.” A consequence of this was the risk that potential rule violations by firm brokers, advisers and other personnel might avoid detection. FINRA found that the set of words and phrases that were “used to flag emails for review” was not adequate to detect certain types of potential rule violations that the firm “knew or should have anticipated” might take place. FINRA has stated that the firm additionally failed to “devote adequate personnel and resources” to the subset of its staff that reviewed flagged emails. According to FINRA, Raymond James Financial Services additionally failed to regularly test the email system’s “configuration and effectiveness,” instead focusing on cutting down the amount of “false positives” detected by the system, as opposed to devoting resources to make sure the system efficiently found all possible “problematic categories of emails.”
FINRA’s Executive Vice President, Department of Enforcement Susan Schroeder said in a statement: “Firms have a clear obligation to reasonably supervise electronic communications, which includes periodically re-evaluating the effectiveness of existing procedures. They should also assess whether their e-mail review and supervisory systems are reasonably designed in light of each firm’s business model.”