FINRA continued its enforcement focus on off-channel communications in 2024, issuing significant fines against broker-dealer firms for failures to supervise and retain business communications.
The enforcement actions targeted firms where registered representatives routinely used personal text messaging, WhatsApp, Signal, and other unapproved channels to communicate with clients about business matters.
Investigations revealed that many firms had policies prohibiting off-channel communications but lacked adequate technology controls and supervisory systems to detect and prevent violations.
FINRA emphasized that the recordkeeping failures undermined the ability of firms and regulators to supervise communications, detect misconduct, and protect investors.
Firms are expected to implement technology solutions that prevent the use of unapproved communication channels, conduct regular surveillance for off-channel activity, and take meaningful disciplinary action against violators.