SEC Slaps BD for Text Message Snafus

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.

Broker-dealers, wealth managers and investment advisors "should be carefully looking at their policies regarding permitted communication channels and in particular at the testing being conducted to validate adherence to company standards," Duke-Richardet said.

Hearsay recently reported that the uptick in the use of social media and text messaging was significant, with Hearsay observing a 300% spike in digital communications since the onset of the coronavirus pandemic.

The SEC order further found that JonesTrading's senior management were among those sending and receiving business-related text messages that were not retained by the firm.

JonesTrading was charged with violating the recordkeeping provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4 thereunder.

JonesTrading, without admitting or denying the findings, agreed to cease and desist from committing or causing any violations of those provisions, to be censured and to pay a civil penalty of $100,000.

— Related on ThinkAdvisor:

• FINRA Sanctions Rep for Messaging Clients on WhatsApp
• Hearsay Introduces Automated Compliance Solution for Texting