The five firms, indirect subsidiaries of ING Groep N.V., are Directed Services LLC; ING America Equities Inc.; ING Financial Advisers LLC; ING Financial Partners Inc.; and ING Investment Advisors LLC.
“As a result of broad systemic failures, these firms failed to capture and retain emails from hundreds of representatives and other associated persons, and failed to take adequate steps to ensure that their principals were fulfilling their responsibilities to review emails,” said Brad Bennett, executive vice president and chief of enforcement at FINRA. “Email retention and review continues to be an important regulatory responsibility and an issue of concern for FINRA.”
FINRA found that the firms failed to properly configure hundreds of employee email accounts to ensure that the emails sent to and from those accounts were retained and reviewed at various times between 2004 and 2012. In addition, four of the firms failed to set up systems to retain certain types of emails, such as emails using alternative email addresses, emails sent to distribution lists, emails received as blind carbon copies, encrypted emails and “cloud” emails (emails sent through third-party systems).
As a result of these failures, emails sent to and from hundreds of employees and associated persons were not retained, and because the emails were not retained, they were not subject to supervisory review.
In addition, four of the firms failed to review millions of emails that the firms’ email review software had flagged for supervisory review. At various times between January 2005 and May 2011, nearly six million emails flagged for review went unreviewed by supervisory principals because the review software was not properly configured.
In concluding the settlement, the firms neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. The independent regulator found that the firms violated the recordkeeping provisions of the federal securities laws and FINRA rules, and supervisory requirements under FINRA rules.
FINRA also ordered the firms to conduct a comprehensive review of their systems for the capture, retention and review of email, and to subsequently certify that they have established procedures reasonably designed to address and correct the violations.
The regulatory organization’s investigation was conducted by the Departments of Enforcement and Member Regulation.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck, which is available at no charge through www.finra.org/brokercheck or by calling (800) 289-9999.
Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA's Disciplinary Actions Online database.