Financial institutions have been hit with billions of dollars’ worth of fines in the past couple of years for failing to preserve business text messages. Whether they’re from the SEC, FINRA or CFTC, federal investigators will dig deep when determining if official communications have taken place off normal business channels. Lauren Tringali and Brian Corbin of QuisLex say be prepared to show your work.
Since 2021, U.S. regulators have fined Wall Street firms to the tune of $2.5 billion for inadequate retention of business text messages, stressing that record-keeping requirements extend to communications that take place outside of official business channels.
Announcing last month’s latest enforcement order in response to the failure of financial institutions to stop employees from using off-channel communications, including text messages and WhatsApp, CFTC’s Director of Enforcement Ian McGinley said, “The Commission’s message could not be more clear — recordkeeping and supervision requirements are fundamental, and registrants that fail to comply with these core regulatory obligations do so at their own peril.”
Maintaining detailed records of business-related communications is a strict requirement for financial firms, including broker-dealers, investment advisers and swap dealers under SEC,…
