A case levied against a broker-dealer for text messaging clients highlights the importance of recent guidance issued by the Securities and Exchange Commission.
The securities regulator recently settled charges against JonesTrading Institutional Services LLC, a registered broker-dealer based in California, for failing to preserve business-related text messages sent or received by several of its registered reps on their personal devices when communicating with each other, with firm customers and with third parties.
The text messages concerned, among other things, the size of orders, the timing of trades and the pricing of certain securities, according to the order.
“Some of the messages were responsive to a request for records made to the firm by SEC staff in an unrelated investigation, but, because the responsive text messages were not retained on JonesTrading’s firm-sponsored systems, JonesTrading failed to produce the relevant text messages to the staff,” the complaint states.
Iain Duke-Richardet, compliance strategy principal at Hearsay Systems, told ThinkAdvisor in an email that the action against JonesTrading “shows that the Commission is acting consistently with its guidance regarding the appropriate use of electronic communications,” which was released in mid-August.