NYSE Regulation fined three firms a total of $925,000 for record retention failure and supervision breakdowns. NYSE Regulation also cited each firm for failure to retain employees' electronic communications, a violation of NYSE Rule 440 and Section 17-a4 of the Securities Exchange Act of 1933. The rules require that firms keep tamperproof records for three years, among other things. Those records must be easily accessible for the first two years. The firms consented to the fines, the enforcement notice stated.

Prudential Equity Group was fined $850,000 for failure to self-report when the firm learned in August 2002 its computer systems were not adequately retaining computer logs that indicated all employee e-mails had been reviewed. Another program glitch between July 2001 and September 2002 sent other customer e-mail messages to firm employees without sending the supervisor a copy. NYSE Regulation, therefore, had no means to gauge the adequacy of the firm's employee supervision, the enforcement notice stated. A firm spokesman said the problems have been fixed, and the firm intends to comply with the order.

NYSE Regulation finedKabrik Trading $50,000 for failure to implement an e-mail retention system between October 2002 and May 2003. "The firm's e-mail retention policy consisted of advising employees to retain their e-mails, which was not adequate," the enforcement notice stated. The regulator also stated the firm did not monitor its employees' instant messaging practices. James Conlin, president and chief compliance officer at Kabrik, said the firm corrected e-mail retention problems as soon as they were discovered. "Since May 2003 we have been fully compliant," he said.

York Securities was fined $25,000 for failure to save e-mail in a tamperproof format. The firm saved e-mail on a zip drive between 1999 and 2003, the enforcement notice stated. A call to the firm was referred to David Corcoran, compliance director, who was not available for comment by press time.