The Financial Industry Regulatory Authority Inc. on Thursday hit Allstate Financial Services with $1 million dollar fine for a breakdown of the firm’s failure to supervise information.
According to FINRA, Allstate failed to supervise certain communications and transactions, as well as retain records and provide clients with required information, due to five systemic problems. Some of the problems were as old as 15 years.
Allstate Financial Services neither admitted nor denied Finra’s findings, according to the settlement.
The five areas FINRA listed in which the Allstate broker-dealer fell short of industry rules and requirements ranged from not reviewing emails to improperly paying trail commissions to brokers no longer registered with the firm.
Allstate Financial did not review 44 million emails, including 11,000 with clients or otherwise relating to the firm’s securities business, according to the FINRA settlement.
The firm’s records for about 9,000 clients were incomplete and not linked to the firm’s software for sending certain notices, and they also didn’t adequately supervise the use of several programs used by its registered persons to create consolidated reports, which are documents that typically combine information about most or all of a customer’s financial assets, regardless of where they are held, according to the FINRA complaint.
The firm also paid $587,000 of trailing commissions to 4,400 brokers who were no longer registered with the firm, as well as incorrectly labeling 2,900 client accounts as closed. Those clients did not receive required communications from the firm.
For FINRA’s full findings visit their website, www.finra.org.
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