Pictured: FINRA sign in lobby at Brookfield Place in New York. Photo: FINRA
The Financial Industry Regulatory Authority has fined BTIG, a broker-dealer in San Francisco with about 500 registered representatives, $600,000 for failing to reasonably supervise its employees' use of unapproved communications platforms for business purposes and failing to preserve business-related communications.
According to FINRA's order, between at least January 2020 and July 2024, BTIG failed to supervise the activity sent and received through unapproved platforms by more than 50 current and former firm employees, including members of senior management.
The firm provides investment banking, institutional sales and trading, and research services as well as related brokerage services.
The matter originated from FINRA's review of Form U5 filings by BTIG concerning certain former firm employees. BTGI consented to FINRA's findings without admitting or denying them.
According to the order, at all relevant times, BTIG had written policies prohibiting employees from communicating about firm business except through firm-approved communications platforms.
During the time period, however, the more than 50 current and former firm employees communicated about firm business using unapproved platforms, which included "thousands of messages between firm employees and between employees and clients," the order states.
The communications also included "substantive messages with clients about the firm's investment banking business," FINRA said, and the BD "did not obtain, and thus did not preserve, these communications at the time they were exchanged."
The firm was able to recover certain of these communications during FINRA's investigation.
"Members of the firm's senior management were aware of, and personally used, unapproved platforms for business-related communications, but they did not take steps to ensure that the firm obtained and preserved such communications or otherwise ensure compliance with the firm's prohibition on the use of unapproved platforms," according to the order.
In September 2024, the firm implemented a new system to facilitate self-reporting of employees' use of unapproved platforms and subsequently adopted updated written supervisory procedures for monitoring, training and enforcement concerning the use of unapproved platforms.
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