Landolt Securities, Inc has agreed to pay a $25,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
From at least March 2021 to the present, Landolt Securities has failed to establish, maintain and enforce a reasonable system of oversight, including written supervisory procedures (WSPs), to oversee the electronic communications of its registered representatives.
The company’s WSPs did not identify the personnel responsible for checking emails and did not state how often checks should be carried out. The WSPs did not provide reasonable guidance on how to conduct audits and address issues identified during the review of electronic communications.
Further, the WSPs did not require that audits be conducted or supervised by a registered principal.
Additionally, the WSPs did not include any criteria for identifying potentially problematic emails, describe what issues or red flags reviewers should look for, or explain whether and how any problematic emails should be escalated for further review.
Landolt Securities’ email audit was also unreasonable in practice. Audits were not conducted or supervised by a registered principal. Also, the company does not review, evaluate or regularly update the keywords used by the company to flag emails for review.
Therefore, Landolt Securities violated FINRA Rules 3110 and 2010.
In addition to the fine, the company agreed to a reprimand.