The Financial Industry Regulatory Authority has censured and fined Piper Jaffray & Co. $700,000 for failing to retain about 4.3 million e-mails over six years and for not alerting it to problems it was having with e-mail retention and retrieval.
FINRA announced the action Monday, stating in an enforcement document that it stemmed from an investigation of an employee whose e-mails did not include one dated Dec. 7, 2004, which the authority's investigators already had in paper form.
After further inquiry, the regulator found e-mail problems throughout the firm from November 2002 through December 2008. This was the second enforcement action against the Minneapolis brokerage firm for failing to retain e-mails.
The enforcement document associated with the most recent case says that, after the initial sanction, Piper failed to establish a supervisory system and procedures designed to detect and remedy deficiencies in its e-mail systems or to ensure compliance with record keeping and reporting requirements.
"E-mail retention is a critical regulatory requirement with which broker-dealers must comply," James S. Shorris, a FINRA executive vice president and its acting enforcement director, said Monday.
The firm responded to the enforcement action by stating that its e-mail retention problems were "inadvertent," "isolated" and "caused by technology issues."
Piper Jaffray said: "Over the entire period reviewed we retained approximately 98% of e-mails, rather than 100% as we were required to do. The overwhelming majority of these issues occurred prior to Aug. 1, 2006."
The firm said it "has taken multiple steps to improve its archival capabilities over time" and that its e-mail retention has improved to "effectively 100%."
