Brokerage Firm Settles FINRA Allegations for Texting Lapses and Due Diligence Deficiencies

Posted on July 2nd, 2024 at 9:16 AM
Brokerage Firm Settles FINRA Allegations for Texting Lapses and Due Diligence Deficiencies

From the desk of Jim Eccleston at Eccleston Law

A recent settlement between a Florida-based brokerage firm and the Financial Industry Regulatory Authority (FINRA) has drawn attention to the importance of retaining business-related text messages and conducting due diligence on private placement offerings. Dawson James Securities has agreed to pay $500,000 to settle allegations by FINRA that it failed to retain over 10,000 business-related text messages spanning a decade.

According to WealthManagement.com, the settlement stemmed from a FINRA examination, during which it was discovered that Dawson James prohibited texting for business purposes from August 2011 to December 2017, and again from January 2021 onwards, without implementing a system to monitor, detect, review, or preserve such messages. CEO Robert Dawson Keyser Jr. sent and received approximately 4,400 business-related text messages using his firm-issued mobile phone despite the prohibition.

In addition to the texting lapses, FINRA found deficiencies in Dawson James' supervisory systems for due diligence of private placement offerings. Specifically, WealthManagement.com reports that the firm's procedures failed to address conflicts of interest when its investment bankers conducted due diligence on offerings by affiliated issuers.

Dawson James neither admitted nor denied the findings, however, the firm consented to a $500,000 fine and a censure. Additionally, the firm agreed to hire a third-party compliance consultant to evaluate its procedures for retaining and reviewing business-related texts, among other measures. Keyser Jr. accepted a one-month suspension and a $10,000 fine as part of the settlement.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next

I am grateful to have found an outstanding law firm that specializes in securities matters. My lawyers were extremely knowledgeable, diligent, and are skilled litigators. No stone was left upturned. As a result of their experience and tenacity, the arbitration proceeding was dismissed in my favor.

Michael E.

LATEST NEWS AND ARTICLES

March 13, 2025
Congress Considers Expanding the Accredited Investor Definition

A recent congressional hearing examined potential reforms to the accredited investor definition, a critical threshold determining who can participate in private market investments.

March 12, 2025
GPB Capital Investors May Receive Some Compensation Under Proposed Distribution Plan

GPB Capital Holdings investors have not received returns on their investments since 2018. According to InvestmentNews, after years of litigation, a court-appointed receiver has submitted a plan to return funds to the 17,000 investors who purchased $1.8 billion in GPB limited partnerships.

March 11, 2025
Former CNBC Analyst Pleads Guilty to $2.7 Million Securities Fraud Scheme

James Arthur McDonald Jr., a former financial advisor and frequent CNBC guest analyst, has agreed to plead guilty to securities fraud, admitting to defrauding investors out of at least $2.7 million, as reported by ThinkAdvisor. The felony charge carries a maximum sentence of 20 years in federal prison.