A Broker-Dealer Fines $100K For Failure to Save Text Messages

In settlement for failing to protect registered representatives’ business-related text messages or their compliance with text messages the SEC issued a $100,000 fine to a broker-dealer.

According to the regulator, JonesTrading Institutional Services had policies that prohibited representatives from using text messaging for business-related correspondence. In connection with its investigation into a third party last 2019, the SEC discovered that several company representatives exchanged business-related text messages in 2018 and 2019. According to an administrative proceeding document, published by the SEC last week.

The messages included information about the size and timing of orders, trading activity, product offerings, market prices, and the time of SEC administrative filings. According to the SEC, JonesTrading did not keep copies of these messages.

In addition, SEC finds that the senior management at the company knew that employees used text messaging to communicate with one another and clients. 

The company took remedial measures after being alerted by the SEC. According to the SEC, this included additional compliance trading and reminding employees of the importance of capturing their text messages. It also reiterated its ban on text messaging for business-related communications. According to the SEC, employees were also informed that they could use company-sponsored software to preserve text messages if they wanted to use personal devices for business purposes.

According to the administrative proceeding document, JonesTrading agreed to the fine but did not admit or deny the findings.

Final Thoughts: 

The business needs to archive text messages for multiple critical reasons. One of these is to ensure compliance with FINRA and SEC and to be able to provide a single version of the truth in case a problem arises. LeapXpert is a responsible business communication platform that automatically records,  and archives all business conversations, whether internal or between businesses and their clients, via instant messaging apps like We Chat. It integrates seamlessly with WhatsApp, Facebook, Messenger and many other messaging applications.

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