Edward D. Jones has entered into a $1.1 million settlement with the Financial Industry Regulatory Authority over allegations that the broker-dealer failed to produce phone records in a timely manner for 10 separate Finra investigations.
The issue arose when, in February 2017, Edward Jones implemented a policy of deleting call detail records older than 18 months from the internal network drive that housed the firm’s records.
This was referred to as “Location A” in the letter of acceptance, waiver and consent, and it was where Edward Jones would search for call records in response to regulatory, litigation and arbitration requests, the letter said.
However, the regulatory body said Edward Jones neglected to search a second storage location for call records older than 18 months, even though the location was known to the firm and after investigators had requested those older records during multiple investigations.
This was known as “Location B,” where the call records were stored for business and planning purposes, Finra’s letter said. This location was not subject to the policy of deleting calls older than 18 months. Yet in 10 separate investigations that involved allegations of potential misconduct—including unauthorized trading, discretionary trading and excessive trading—Edward Jones failed to search this location when asked to produce pertinent records from before the previous 18 months.
This remained true even when the firm became aware of the issue, the letter said.
“In July 2019, members of the firm’s group responsible for responding to regulatory requests learned of Location B, realized that Edward Jones should be searching Location B when responding to certain requests for call detail records, and understood that it was likely that some of Edward Jones’s past responses to requests from regulators and others were incomplete,” the letter stated. “Notwithstanding the firm’s awareness of this issue in July 2019, the firm failed to fulfill its obligations.”
With two subsequent investigations, one later in 2019 and one in 2020, the firm failed to include Location B in record searches even though new requests were made. In addition, there were five ongoing Finra investigations in July 2019 where the investigators had asked for records older than 18 months but did not receive them.
And finally, Finra’s disciplinary letter said, there were cases where Edward Jones was aware of investigations going back more than 18 months and did not take steps to secure those call records from Location A before they were deleted.
In response to these allegations, Edward Jones consented to a censure, the $1.1 million fine and a remedy within 90 days, the letter said.
When contacted for comment, an Edward Jones spokesperson would say only that the firm takes its responsibilities in regulatory inquiries seriously and has “remedied the issues raised in this matter.”