Raymond James Financial Services has been fined $2 million by the Financial Industry Regulatory Authority Inc. (FINRA) for maintaining inadequate supervisory procedures for reviewing emails.
During a nine-year review period, FINRA found that Raymond James’ review system was significantly flawed. According to the findings, millions of emails went without meaningful review, possibly allowing misconduct by firm personnel to go undetected.
FINRA also found that the ‘lexicon’– the combinations of words and phrases used to flag emails for potential misconduct – was not reasonably designed to detect possible violations, given the size and structure of the firm.
Knowing this, the firm should have conducted a regular test of its lexicon-based surveillance systems and related procedures, but it failed to do so. Instead of ensuring the system was effectively identifying problematic emails, the firm focused on reducing the number of ‘false positives’. In other words, in order to save itself time, Raymond James arguably placed in investors at greater risk of broker misconduct.
Emails sent by certain personnel who serviced customer brokerage accounts or worked in branches with private email servers were also unreasonably excluded from email surveillance.
For emails that were flagged in the system, Raymond James failed to devote enough resources and personnel to review them, despite the growth of email usage over time and the fact that misconduct often can be detected by reviewing broker emails.
Raymond James to Conduct Risk-Based Review After Fine
In addition to paying the fine, Raymond James has agreed to conduct a retrospective review of past emails to detect potential violations. The company neither has admitted nor denied the charges filed by FINRA.
Have You Lost Money Investing with Raymond James?
If you lost money investing with Raymond James or are a victim of stockbroker misconduct, contact a qualified investment fraud attorney today.
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