The Financial Industry Regulatory Authority (FINRA) recently sanctioned Bedminster Financial Group, Ltd. (BFG) and Robert M. Van Pelt (Van Pelt). FINRA alleged that at least four representatives of BFG used non-BFG email accounts for securities related communications to the public, customers and prospective customers and that Van Pelt failed to retain and review these emails. FINRA also found that BFG, through its President and Chief Compliance Officer Van Pelt, failed to enforce its written supervisory procedures by failing to 1) preserve business related emails; 2) review of business related mail; 3) inspect of non-branch offices; and 4) review and approve website content.
BFG’s main office is located in Holicong, Pennsylvania. BFG employs thirty-four registered persons, had six registered branch offices, and twenty-eight non-branch offices located across the country. BFG’s primary business is the receipt of finder’s fees for private placements and Private Investment in Public Equity (PIPE) offerings. Since 1996, Van Pelt has been registered with BFG and is the firm’s President, CCO, and majority owner.
The securities laws require firms to maintain and preserve for at least three years originals of all communications received and copies of all communications sent relating to the firm’s business. BFG’s supervisory procedures required representatives to use the firm’s email account for business related communications and prohibited employees from communicating with customers or prospects through their personal email accounts unless the outside account was first approved by the firm and records of the email activity were provided to the firm. Despite BFG’s prohibition against using personal email addresses, FINRA found that at least four representatives used their unapproved personal email accounts for business-related communications without copying or forwarding these emails to the firm.