Compliance Overhaul Amid Industry Crackdown
In May 2023, the firm retained an outside consultant to review its supervision of text messaging practices. It later enhanced its written supervisory procedures, monitoring systems, employee training and internal communications tied to its policies on texting.
The case unfolds against a broader regulatory campaign targeting off-channel communications. In recent years, the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission pursued sweeping enforcement actions over the use of platforms such as WhatsApp for business communications. Those efforts resulted in settlements with more than 100 firms and nearly $2 billion in penalties.
Under the Trump administration, SEC Chairman Paul Atkins has said certain prior books-and-records enforcement actions “consumed excessive commission resources not commensurate with any measure of investor harm.”
Legal observers told Law360 that the Biden-era enforcement sweep significantly intensified firms’ focus on communication recordkeeping compliance. Although actions at other agencies have slowed, FINRA continues to advance similar cases.
Benjamin Edwards is represented by Jeff Ziesman of Norton Rose Fulbright. FINRA is represented in-house by Christopher L. Donati.
