Ally Invest Securities LLC has agreed to pay a fine of $850,000 as a part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From September 2016 through November 2022, Ally failed to preserve approximately 22.6 million electronic communications with customers about trade executions, fund transfers, and other account activity, plus an unknown quantity of internal and external communications about the firm’s securities business from approximately 90 group mailboxes.

Ally did not preserve those communications due to separate coding errors and other technical failures in three systems that caused the communications to be lost.

As a result of the technical failures, Ally was unable to fully respond to 39 regulatory inquiries from the SEC and FINRA.

Therefore, Ally violated § 17(a) and Rule 17a-4 of the Exchange Act and FINRA Rules 4511 and 2010.

During the same period, Ally failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, that were reasonably designed to achieve compliance with the firm’s obligation to review business-related electronic communications to and from approximately 120 group mailboxes and a software platform used for customer service communications.

Ally’s procedures did not require the group mailboxes and all user accounts of the customer-service software to be connected to the firm’s system for selecting communications for review, nor did the firm’s procedures describe how to verify that the mailboxes and user accounts were connected to the review system.

As a result, Ally failed to timely perform any supervisory review of approximately 521,000 business-related electronic communications from approximately 30 of the group mailboxes and the software platform, plus an unknown quantity of communications from approximately 90 of the group mailboxes.

FINRA previously warned Ally about another failure to review business-related electronic communications. By failing to implement a reasonable system, including written procedures, for supervising business-related electronic communications, Ally violated FINRA Rules 3110 and 2010.

In resolving this matter, FINRA has recognized Ally’s extraordinary cooperation.

In addition to the $850,000 fine, Ally has agreed to a censure.

Ally has been a FINRA member since 2005. Ally’s principal place of business is in Charlotte, North Carolina and the firm has more than 200 registered representatives and six branch offices. Ally is primarily an online broker-dealer engaging in a general securities business.