The Financial Industry Regulatory Authority (FINRA) a has announced Wednesday it has fined a Little Rock, Ark.-based brokerage firm for US$900,000 failing to properly supervise emails from research analysts to its traders and salespeople.
FINRA also centured Stephens Inc., for “inadequately supervising firm-wide internal ‘flash’ emails sent by its research analysts.”
The firm settled the allegations, neither admitting nor denying the charges, but it consented to FINRA’s findings.
FINRA found that from August 2013 through January 2016, “Stephens did not adequately supervise the content and dissemination of the flash emails”; and, that the firm failed to properly supervise trading in connection with these emails.
“These failures created the risk that the flash emails could potentially include material nonpublic information that might be misused by sales and trading personnel,” FINRA says in a statement.
“The supervision of internal communications by research analysts to the sales force requires extreme vigilance given the possibility of revealing material nonpublic information in advance of published research,” says Brad Bennett, executive vice president and chief of enforcement at FINRA. “Today’s action reminds those firms that permit such communications of the need to supervise and monitor them, and to ensure that their controls protect against trading based on the information.”