Call Now For a Free Consultation:
(614) 502-6165

Stephens Inc. Fined $900,000 by FINRA

Meyer Wilson staff pose in office

Little Rock, Arkansas-based brokerage firm Stephens Inc., has been fined $900,000 by the Financial Industry Regulatory Authority after allegedly providing inadequate supervision of firm-wide internal “flash” emails. The emails — sent by the firm’s research analysts — included information about industries and companies covered by the firm’s research department.

According to FINRA’s claim, Stephens’ failures created the risk that material non-public information could have been misused by personnel in sales and trading. Stephens neither admitted nor denied FINRA’s charges, but will stop distributing flash emails in this manner. Stephens also consented to developing a plan for comprehensive reviews of training, procedures, and policies in the research department.

The firm’s flash email program was set up to allow researchers to share information in an expedited way within the firm.

FINRA’s investigation found that between August 2013 and January 2016, the content and dissemination of the emails were not properly supervised and the firm did not have adequate policies and procedures in place. The investigation also found that employees at the firm also forwarded emails labeled for “internal use only” to their customers. In at least one instance, FINRA also found that content from an unapproved, draft research report was cut and pasted into a flash email. Although these practices were contrary to firm policy, FINRA found that the firm lacked effective monitoring or supervisory systems to detect or prevent them.

FINRA’s Executive Vice President and Chief of Enforcement Brad Bennett made the following statement,

The supervision of internal communications by research analysts to the sales force requires extreme vigilance given the possibility of revealing material nonpublic information in advance of published research. Today's action reminds those firms that permit such communications of the need to supervise and monitor them, and to ensure that their controls protect against trading based on the information.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation

Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
6140 Parkland Blvd.,
Suite 330
Mayfield Heights, OH 44124
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
Follow Us
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram