The Financial Industry Regulatory Authority Inc. Tuesday penalized Edward D. Jones & Co. with a censure and a $1.1 million fine as a result of the firm's mishandling of phone records that Finra was seeking in a variety of inquiries.
"From May 2017 to March 2021, Edward Jones failed to timely or completely produce certain phone records responsive to Finra document requests in ten separate FINRA investigations," according to the Finra settlement, which Edward Jones accepted without admitting to or denying Finra's findings. "In certain responses during this period, the firm also inaccurately represented to Finra that phone records older than 18 months were not available, even though that was not the case."
"We take our responsibilities to produce information in regulatory inquiries very seriously and have remedied the issues raised in this matter," an Edward Jones spokesperson wrote in an email.
Earlier this year, Edward Jones said it intended to invest $1 billion in 2022 in its technology infrastructure — including digital initiatives and virtual tools — to improve the relationships between clients and their financial advisers.
With 22,000 registered reps and financial advisers, Edward Jones used two locations to store phone records during the period in question, which ultimately caused a confused response by the firm to the regulator, according to Finra.
"From May 2017 to March 2021, Edward Jones received or had pending document requests from Finra seeking call detail records going back in time more than 18 months in ten separate investigations," which stemmed from allegations of potential misconduct, including "unauthorized trading, discretionary trading, and excessive trading," according to Finra.
In responding to these requests, Edward Jones failed to search one of the two locations, which contained call records older than 18 months and housed responsive documents, according to Finra.
On top of that, Edward Jones "also failed to promptly alert Finra once it learned of its production failures," according to Finra, with Edward Jones violating industry rules that require broker-dealers to provide information to the regulator during an investigation or proceeding.
Finra also cited Rule 2010 in the matter, which requires brokerage firms to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
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