The Financial Industry Regulatory Authority has fined Piper Jaffray nearly half a million pounds ($700,000) for failing to retain 4.3 million emails between November 2002 and December 2008.
The investment bank also failed to inform FINRA of its email retention and retrieval problems, which meant that the firm was unable to fully comply with email extraction requests from the US regulator. Issues included numerous outages in its email archiving system.
James Shorris, FINRA executive vice-president and acting director of enforcement, said: “Email retention is a critical regulatory requirement with which broker-dealers must comply.
“Piper Jaffray failed to disclose that it was not making complete production of its emails due to intermittent problems with its systems – potentially preventing production of crucial evidence of improper conduct by the firm and its employees.”
The bank has previously been fined $1.65m (£1.14m) for email retention failures in November 2002, discovered during investigations of conflict of interest between its investment banking and research departments by the Securities and Exchange Commission, New York Stock Exchange Regulation and NASD.
As part of that settlement, Piper Jaffray had been required to review its systems and certify that it had established systems and procedures to preserve emails. It certified the systems in March 2003.
However, the investment bank only informed FINRA of its email issues, which it said it had been experiencing since November 2002, after an extended investigation into a former employee’s alleged misconduct.
FINRA discovered the issues when it asked the bank for all the emails sent or received by a former employee suspected misconduct. Piper Jaffray provided a CD-ROM, claiming that it held all of the employee’s emails on his firm and Bloomberg email accounts. However, FINRA discovered that one crucial email, of which it already had a hard copy, was not present on the CD-ROM. Only after further enquiries from FINRA did Piper Jaffray admit to its email system issues.
The regulator concluded: “In settling this matter, Piper Jaffray neither admitted nor denied the charges, but consented to the entry of FINRA's findings.”