A Florida broker-dealer and its chief executive officer were penalized by the Financial Industry Regulatory Authority over messaging violations, ThinkAdvisor reports.
FINRA released a letter of acceptance, waiver and consent in the case of Dawson James Securities, Inc. and its CEO Robert Dawson Keyser Jr. Under terms of the settlement, the firm has been fined $500,000 while Keyser was fined $10,000 and suspended for one month.
FINRA said that from August 2011 through January 2021, Dawson James failed to preserve and review
over 10,900 business-related text messages sent or received by at least 27 associated persons, including Keyser. The messages “included communications about the firm’s net capital computations, communications about customer complaints, and communications with customers about holding or selling positions in stocks and warrants.”
It was determined that he firm’s supervisory system, including written supervisory procedures, was not reasonably designed to achieve compliance with the firm’s obligation to capture, retain, and review text messages.
Dawson James was found to have violated Section 17(a) of the Securities Exchange Act of 1934, Exchange Act Rule 17a-4, NASD Rules 3010 and 3110(a), and FINRA Rules 3110, 4511, and 2010.
Furthermore, FINRA said that Keyser sent or received approximately 4,400 text messages with his firm-issued mobile phone relating to the firm’s securities business from August 2011 to December 2017, which the firm did not retain. This was during a period when Dawson James had a prohibition against communicating about securities business via text message. By causing Dawson James to maintain incomplete books and records, Keyser violated NASD Rule 3110(a) and FINRA Rules 4511 and 2010, according to the AWC letter.
In addition to the $500,000 fine, Dawson James was censured and agreed to undertake measures to review and improve its supervisory system and procedures, specifically in areas related to the preservation and review of business communications and the due diligence process for private placement offerings.
Dawson James Securities, based in Boca Raton, has about 35 registered representatives across three branch offices and has primarily focused on selling private and public securities offerings. Keyser has been with the firm since 2004 and served as CEO and a shareholder since August 2012.
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