The Financial Industry Regulatory Authority (FINRA) has fined Ally Invest Securities LLC $850,000 and issued a formal censure after finding the U.S. broker-dealer failed to preserve at least 22.6 million business-related electronic communications over a six-year period.
FINRA Fines Ally Invest $850,000 for Failing to Preserve Millions of Business Communications
According to a FINRA letter of acceptance, waiver, and consent, the lapses occurred between September 2016 and November 2022, when technical and coding errors led to the loss of emails and messages concerning trade executions, fund transfers, and account activity.
The failures are said to have violated the Securities Exchange Act of 1934 and FINRA rules requiring firms to maintain complete and accurate business records.
The regulator also found that Ally’s written supervisory procedures were inadequate, leaving more than 521,000 communications unreviewed and undermining the firm’s compliance systems.
These deficiencies, FINRA said, hindered Ally’s ability to respond to 39 regulatory inquiries from both the Securities and Exchange Commission and FINRA itself.
Despite the breaches, FINRA credited Ally for its “extraordinary cooperation”, noting that the firm self-identified and reported the issues before detection by regulators. Ally has since corrected the system failures, reviewed its recordkeeping infrastructure, and implemented broader procedural improvements.
Ally, a FINRA member since 2005, operates primarily as an online broker-dealer from its headquarters in Charlotte, North Carolina, with more than 200 registered representatives.
The settlement resolves the matter without Ally admitting or denying FINRA’s findings. The sanctions will take effect on a date to be determined by the regulator.
