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Raymond James Fined $2M Over Emails

By Alex Padalka December 28, 2017

Finra has doled out a $2 million fine to Raymond James for lack of an adequate email-monitoring supervisory system, according to a press release from the industry’s self-regulator.

Raymond James allegedly allowed millions of emails to bypass “meaningful review” over the course of a nine-year period, Finra says. As a result, certain types of misconduct allegedly went undetected, according to the press release.

Raymond James’ “lexicon” — combinations of certain words and phrases — wasn’t appropriately designed, particularly when taking into account the firm’s previous disciplinary actions, its size, structure and business model, Finra alleges.

The company allegedly failed to periodically test the lexicon’s configuration and effectiveness, instead focusing on cutting down the frequency of “false positives” subject to review, according to the press release.

The brokerage allegedly also didn’t allocate enough resources or personnel to the team tasked with reviewing flagged emails even as their frequency grew, according to the press release.

Raymond James also apparently unreasonably excluded some staff working on client brokerage accounts from email surveillance, and didn’t apply the lexicon to email communications of 1,300 registered reps at branches with their own email severs, Finra alleges.

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As is typically the case, Raymond James neither admitted nor denied the charges in settling the matter with the regulator, according to the press release. As part of the settlement, the brokerage also agreed to run a risk-based retrospective review of emails to identify potential infractions, Finra says.

The regulator advises member firms to review its regulatory notice on supervision of email communications.