An Iowa-based firm will be fined for violations of recordkeeping rules pertaining to the preservation of customer records, according to ThinkAdvisor.
A letter of acceptance, waiver and consent disclosed that the Financial Industry Regulatory Authority will fine CUNA Brokerage Services $30,000.
FINRA states that in January 2023, CUNA Brokerage Services failed to preserve approximately 14,000 records containing information the firm collected from retail customers when making recommendations to these customers regarding rollovers of their employer-sponsored retirement plans into individual retirement accounts
According to FINRA, CUNA Brokerage Services inadvertently deleted the records, which were created by the firm as it transitioned its business from providing services to retail customers. The records contained information collected pursuant to Regulation Best Interest, including such as whether a potential transfer out of the retirement plan was a forced distribution from the plan, the importance of protecting retirement assets from creditors or legal judgments, and the importance to the customer of flexibility in distribution options. CUNA did not preserve the data in any other records maintained by the firm.
CUNA was in violation of Section 17(a) of the Securities Exchange Act, Exchange Act Rule 17a-4(e)(5), and FINRA Rules 4511 and 2010. The firm did not admit or deny the findings but accepted them and consented to the fine and a censure.
Section 17(a) and Exchange Act Rule 17a-3 require a broker-dealer to create and keep current certain records relating to its business.
FINRA Rule 4511 provides that each member shall make and preserve books and records as required under the FINRA rules, the Exchange Act and the applicable Exchange Act rules. Broker-dealers are also required to make and keep current a record of all information collected from customers pursuant to Regulation BI.
Violations of FINRA and SEC recordkeeping rules are a violation of FINRA Rule 2010, which requires member firms to observe high standards of commercial honor and just and equitable principles of trade in conducting their business.
The attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter.
