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Regulation and Compliance > Federal Regulation > FINRA

FINRA Fines TD Private Client Wealth for Email Review Failures

By Melanie Waddell

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The Financial Industry Regulatory Authority has fined TD Private Client Wealth $600,000 for failing to review approximately 3.5 million emails related to 691 employee email accounts.

According to FINRA’s order, from February 2013 through July 2022, TDPCW failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with the firm’s obligation to review correspondence and internal communications.

Accordingly, the firm violated NASD Rule 3010 and FINRA Rules 3110 and 2010.

According to FINRA’s order, during the time period, the firm “often failed to place the email accounts for its new employees into the electronic queue it established for email review,” with approximately 43% of employees not being placed into the review queue within five days of the date that they became associated with the firm.

At least 34 employees were not added for more than one year, the order states, and at least two employees were not added for more than five years.

The firm’s written procedures “failed to set forth the necessary step to add accounts to the review queue, identify the departments or personnel responsible for those steps, or identify any requirements for when the steps should be taken,” according to the order.

Due to the lack of reasonable written procedures, “there were miscommunications between multiple departments about whether the email accounts had been placed into the queue and misunderstandings about which department was responsible for carrying out particular steps required to place an account into the queue,” FINRA said.

As a result, the firm failed to review approximately 3.5 million emails, from 691 employee email accounts, for varying periods of time during the relevant period.

TDPCW has approximately 585 registered reps and 40 branch offices.

The firm also failed to maintain a reasonable system to verify that new employees’ email accounts were being placed into the firm’s electronic queue for review.

Instead, according to the order, “the firm relied on an ad hoc and occasional practice of manually comparing a list of new hires with the names of the employees whose email accounts had been placed into the electronic queue. This practice was not reasonable given the volume of employees the firm onboarded during the relevant period.”

Between February 2013 and July 2022, approximately 860 employees became associated with the firm.

In addition, “the firm failed to reasonably investigate and address red flags that employee email accounts were missing from the review queue,” the order states.

For example, during November 2018 and August 2019, “the firm’s compliance personnel detected that certain email accounts were not being reviewed and asked the firm’s information technology personnel to ensure that the accounts were included in the queue,” FINRA’s order said.

“Yet due to miscommunications among personnel and a misunderstanding of the steps required for review, the emails were not promptly added to the review queue, in some instances until February 2022. Additionally, no one at the firm verified whether the emails had been added,” FINRA states.

Further, the firm did not reasonably investigate why the email accounts were missing and whether any other email accounts were missing until after FINRA commenced its investigation.

Melanie Waddell

@Think_MelanieW

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