A finding against broker-dealer Edward Jones stands out from FINRA’s February disciplinary actions update.

According to the regulator’s investigation, Jones stored call detail records in two locations. The firm implemented a purge protocol, deleting records older than 18 months in the primary location.

At this primary location a hold was not placed in a timely fashion on call detail records relevant to seven FINRA investigations. Records continued to be purged between the time of being requested by FINRA and the time of them being pulled by the firm’s staff. As a result, call detail records were missing information for periods that “ranged from several days to several weeks.”

Purge protocol

The firm did not apply the purge protocol to the secondary location, where the same records were stored for analytics purposes rather than for archiving purposes.

FINRA requested records as part of its investigation work, only to be told that records older than 18 months were not available.

The firm subsequently realised that the records were available and that its responses to FINRA were incorrect, but only communicated this to FINRA eight months after making the discovery.

Edward Jones accepted and consented to FINRA’s findings without admitting or denying them.

Technology and compliance

This action, reported in December, very clearly shows how important it is for compliance teams to have a solid understanding of the infrastructure and compliance technologies in place at their respective firms. A closer working relationship between the technology and compliance functions would go a long way in helping address issues such as the one uncovered by the FINRA investigation.

The issues connected with the purging of records that had already been requested demonstrate the need for adequate systems and cross-functional collaboration, and for carefully thought out processes that leverage the available technology in a practical way that leads to good compliance outcomes.