Off-Channel Communications Are Not the Only Source of Electronic Recordkeeping Violations

In the past several years, regulators have been laser-focused on the recordkeeping duties of regulated firms with respect to business communications made on unapproved channels. The SEC and CFTC have together imposed nearly $3 billion in penalties for violations of those duties. A recent FINRA proceeding is an important reminder that regulated firms should also remain vigilant with respect to their authorized systems – especially legacy systems. FINRA’s letter of acceptance waiver and consent (AWC) with a broker-dealer alleges that, due to deficient supervisory procedures, the firm failed to preserve more than a million business-related electronic communications on four of its own platforms. This article details FINRA’s allegations and the terms of the AWC. See “Latest SEC Sweep of Off‑Channel Communications Both Befuddles and Turns Up the Heat on Investment Advisers” (Apr. 10, 2024).

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