Firm Settles Charges for Off-Channel Communications Failures

A firm settled FINRA charges for failing to preserve business-related communications sent via unapproved platforms. 

According to the AWC, more than 50 current and former firm employees—including members of senior management—used unapproved off-channel platforms to communicate about the firm’s investment banking business. FINRA said thousands of substantive messages were exchanged internally and with clients. FINRA said the firm did not obtain or preserve these communications, despite maintaining written policies prohibiting such use.

FINRA noted that the firm implemented a new system in September 2024 to facilitate employee self-reporting of off-channel communications and updated its supervisory procedures relating to monitoring, training, and enforcement.

FINRA concluded that the firm violated Exchange Act Section 17(a) ("Records and Reports") and Rule 17a-4 ("Records to be preserved by certain exchange members, brokers and dealers"), as well as FINRA Rules 4511 ("General Requirements"), 2010 ("Standards of Commercial Honor and Principles of Trade") and 3110 ("Supervision").

To settle the matter, the firm agreed to (i) a censure and (ii) a fine of $600,000.