Landolt Securities, Inc has agreed to pay a fine of $25,000 as a 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 supervisory system, including written supervisory procedures (WSPs), to supervise the electronic communications of its registered representatives.
The firm’s WSPs did not identify the personnel responsible for reviewing emails and did not state how frequently reviews should occur. The WSPs provided no reasonable guidance on how to conduct reviews and address issues identified during the review of electronic communications.
Further, the WSPs did not require that reviews be conducted or supervised by a registered principal.
In addition, the WSPs did not include any criteria for identifying potentially problematic emails, describe what issues or red flags reviewers should be reviewing for, or explain whether and how any potentially problematic emails should be escalated for further review.
Landolt Securities’ email review was also unreasonable in practice. The reviews were not conducted or supervised by a registered principal. The firm also did not regularly review, assess, or update keywords used by the firm to flag emails for review.
Therefore, Landolt Securities violated FINRA Rules 3110 and 2010.
On top of the fine, the firm has agreed to a censure.
