FINRA Hits BD With $500k Fine Over Texting

What You Need to Know

FINRA levied a $500,000 fine against Dawson James and suspended its CEO for failing to preserve and review over 10,900 business-related text messages.
The firm's CEO used his firm-issued mobile phone to send and receive approximately 4,400 business-related text messages.

The Financial Industry Regulatory Authority has levied a $500,000 fine against Dawson James Securities and suspended its CEO for failing to preserve and review over 10,900 business-related text messages sent or received by at least 27 associated persons.

The broker-dealer’s CEO, Robert Dawson Keyser Jr., was also suspended for one month and ordered to pay a $10,000 fine.

According to FINRA’s order, Dawson James has been a FINRA member firm since 2004.

Headquartered in Boca Raton, Florida, the firm has three branch offices and about 35 registered representatives. The firm conducts a general securities business, primarily selling private and public securities offerings, and its FINRA record includes 15 disclosures.

Keyser Jr., Dawson James’ CEO, entered the securities industry in 1984 when he became associated with a FINRA member firm.

Since August 2012, he has been registered with FINRA in multiple capacities, including as a general securities representative and general securities principal, through his association with Dawson James. Keyser Jr. also has been the chief executive officer and a shareholder of Dawson James since August 2012.

From August 2011 through January 2021, Dawson James failed to preserve and review over 10,900 business-related text messages sent or received by at least 27 associated persons, including Keyser Jr.

Moreover, “Keyser Jr. sent or received roughly 4,400 text messages relating to the firm’s securities business from August 2011 to December 2017, which the firm did not retain,” the order states. “During this period, Dawson James prohibited associated persons from communicating about securities business via text message.”

More Order Details

These messages, FINRA’s order states, “included communications about the firm’s net capital computations, communications about customer complaints, and communications with customers about holding or selling positions in stocks and warrants.”

The firm’s management “knew that associated persons used text messaging for business-related communications, and during the period when the firm prohibited using text messaging for business purposes, Keyser Jr. used his firm-issued mobile phone to send and receive approximately 4,400 business-related text messages.”

Nonetheless, Dawson James “failed to take reasonable steps to enforce its prohibition against using text messaging for business-related communications, and the firm failed to take steps to capture, retain, and review its associated persons’ business-related text messages,” the order states.

Dawson James was censured, ordered to pay a $500,000 fine and agreed to undertake remedial steps.