First New York Securities of New York, NY, agreed to a $65K fine and other sanctions to settle FINRA charges relating to firm's handling of electronic communications.  According to FINRA, First New York failed to preserve for a period of not less than 3 years, the first 2 in an accessible place, copies of IM's sent and received between several of the firm’s traders and an external party on certain days over the course of 10 weeks, as well as the new account form and clearing agreement for one of the firm’s accounts at another broker-dealer.

    Misrepresentation of Submitted Reports and Documents.   In response to an NASD Rule 8210 request for documentation evidencing past supervisory reviews of e-communications, the firm ended up submitting newly-created documentation that merely duplicated past reviews, but were not copies of actual past reviews.

The problem escalated when ..., instead of duplicating such reviews using the same parameters as were in effect during the review period, the associated person re-conducted such reviews using changed and expanded parameters, signed and hand-wrote in dates of when he estimated the reviews took place, and delivered them to the secretary of the firm principal who was responding to the inquiry on the firm’s behalf. 

The problem came to a head when ... the firm submitted the assembled documents to FINRA without allegedly first subjecting them to a supervisory review.  Rather than being evidence of of past reviews, the firm submitted newly-created reports that were neither authentic nor contemporaneous evidence of supervisory reviews that were actually conducted during the review period. 

    Additional Sanctions.   In addition to the fine, the firm must revise its WSP's concerning retention and review of e-communications.  The sanctions reflected certain mitigating factors.  This is FINRA Case #2006005271003.   [FINRA March Disciplinary Actions]