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FINRA Fines Piper Jaffray and Co. $700,000

David P. Meyer, Esq.

On Monday, May 24, 2010, the Financial Industry Regulatory Authority, Inc. (FINRA) fined Piper Jaffray and Co. $700,000 for failing to retain approximately 4.3 million e-mails over a period of six years, according to the FINRA news release.

In 2002, after a joint sanction by the New York Stock Exchange Regulation and NASD, the firm was required to certify that it had policies and procedures in place to ensure the preservation of electronic mail communications. In March 2003, the firm certified that such systems were in place. According to FINRA, the firm then failed to retain millions of e-mails between 2002 and 2008 without once informing regulators that it was having email retention and retrieval issues.

The issues were discovered during the course of a FINRA investigation into a claim of misconduct against a former Piper Jaffray and Co. employee. FINRA had requested the former employee's e-mail records and, upon receiving an electronic version, realized that the electronic records were incomplete. Once the discrepancies were brought to light, the firm informed FINRA of the problem.

Piper Jaffary and Co. settled with FINRA without admitting or denying the charges.

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