The SEC, FINRA and over 3 billion WhatsApp users worldwide
WhatsApp users are expected to surpass 3 billion in June 2024 and while the SEC off channel communications sweep shows no sign of abating, FINRA is sharpening its focus on the use of unmonitored messaging apps. Maybe this is why, at the 2024 FINRA Annual Conference, the CellTrust team found that WhatsApp messaging compliance was a top priority for most compliance leaders.
Off channel WhatsApp messaging is on the regulatory radar
In the financial services industry, “off channel” means business related messages exchanged through apps that are not monitored for supervision and recordkeeping purposes.
Continuing their rigorous enforcement, the SEC initiated a sweep in 2021 that resulted in staggering penalty fines amounting to billions of dollars. In February, the SEC charged five broker dealers, seven dually registered broker dealers and investment advisors, and four affiliated investment advisors for widespread and longstanding failures to maintain and preserve electronic communications. The firms, upon admitting their violations, agreed to pay a combined civil penalty exceeding $81 million.
Will FINRA suspension become commonplace for off channel violations?
Underlining the seriousness of the issue, FINRA has recently taken the step of suspending individual broker dealers from working in the securities industry for a defined period. This action was taken when these individuals were found to have used unmonitored off channel messaging apps for business communications with their clients.
“With WhatsApp’s popularity soaring, financial advisors often find the channel increasingly essential to doing business. However, penalty fines can rapidly mount up when WhatsApp is considered off channel.” Sean Moshir, Co-founder and CEO, CellTrust.
2024 FINRA Annual Conference compliance priority
It was no surprise for the CellTrust team attending the 2024 FINRA Annual Conference this year that communications compliance was a top priority for risk managers and compliance leaders as they juggle the demand for client/advisor access with regulatory communications compliance. What was more surprising was the increased demand for solutions that enable maximum productivity on the WhatsApp channel while meeting the regulatory recordkeeping requirements of the SEC, FINRA and other agencies responsible for financial industry oversight.
SL2 integrated with WhatsApp
Released in the summer of 2021, SL2 for WhatsApp with the SL2 Shared MBN (Mobile Business Number) feature empowers teams to work together seamlessly in compliance across the mobile channel anytime, anywhere for maximum productivity. Financial advisors can chat and exchange work information with the WhatsApp channel with SL2 without violating compliance rules.
Compliance teams can easily administer and monitor the WhatsApp channel. With SL2’s capture capabilities integrated with WhatsApp and one of our archive partners, the data is eDiscovery ready.
Questions? CellTrust Solution Engineers are here to help.
Book your one to one to learn about our leading edge communication compliance solutions, like:
SL2 integrated with WhatsApp empowering compliant teams for maximum productivity.
SL2 Enterprise Capture for BYOD provides a time and date stamped record of each text/WhatsApp message and retains it for on-demand eDiscovery.
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