A Rockville, MD firm that's been a FINRA member since 1954, settled FINRA charges over supervision and preservation of electronic and written correspondence, and AML procedures.  The firm, H. Beck, Inc. agreed to pay $150K fine, and it's president must certify to FINRA in writing within 30 days of the issuance of the AWC that the firm has implemented systems and procedures reasonably designed to achieve compliance relating to electronic mail communications. Allegations of FINRA Findings re: Correspondence. FINRA found that the firm failed to preserve certain of its business-related electronic and written communications.  Notwithstanding the fact that most of the firm’s RRs are independent contractors operating from "one-man" branch office locations throughout the country, apparent deficiencies in the firm's policies and procedures factored largely into the problem: 

• Beck RRs were allowed to maintain written correspondence at their branch offices and the firm permitted representatives to send e-mails from their personal computers.
• Beck did not have an electronic system to capture e-mails, but instead required RRs to print and make copies of their e-mails, which along with their written correspondence, were reviewed during annual branch inspections.
• RRs were required to send e-mails and written correspondence involving the solicitation of products to compliance for pre-approval.

  FINRA found that Beck didn't have a prior system or procedures in place to retain all other emails and written correspondence after RRs left the firm.  As a result, Beck did not subsequently retain most of the emails and written correspondence for RRs terminated from the firm. Allegations of FINRA Findings re: Suspicious Transactions, AML. Beck didn't establish and implement pols and procedures to readily detect and cause the reporting of suspicious transactions.  Beck's WSPs relating to the reporting of suspicious activity lacked reasonable detail, including the following: 

• specific reports and documents to be reviewed,
• timing and frequency of such reviews,
• specific persons to conduct the reviews,
• description of how the reviews would be conducted and evidenced.
• guidelines for the reporting of suspicious activity, including when an SAR should be filed and what documentation should be maintained.

While Beck had 140,000 active accounts, it used only a minimal number of exception reports.  Further, it place too high a reliance on its clearing firms to assist in the review of suspicious activity. Beck further failed to conduct adequate independent tests of its AML compliance program (AMLCP), failing to sufficiently test topics and failed to adequately memorialize what was reviewed. Finally, with respect to a sample of corporate bond transactions and municipal securities transactions the firm executed, it failed to accurately disclose the receipt time on the majority of the order tickets. For further details, go to:  [FINRA AWC #2009016150001;  Disciplinary Actions for Sept. 2011].