It appears that individuals registered with the Financial Industry Regulatory Authority Inc. are now becoming targets of the variety of ongoing investigations by securities regulators focusing on the unauthorized use of electronic communications systems like text messaging or WhatsApp.
Finra on Monday fined and suspended Ariel Rivero, an individual registered rep working at Jefferies in Miami at the time of his violations of industry rules regarding communications. Finra has taken a handful of similar actions against individual brokers the past couple years.
"Between November 2020 and January 2022, Rivero used WhatsApp Messenger, a mobile phone application used to send and receive encrypted messages, to communicate with six firm customers about securities-related business," according to Finra. "Because WhatsApp was not one of Jefferies’ approved electronic communications channels, the firm did not preserve Rivero’s WhatsApp communications."
Rivero was fined $15,000 and suspended from working in the securities industry for six months, according to the settlement, which the broker agreed to without admitting to or denying Finra's findings in the matter.
Rivero did not return a phone call Wednesday to his new firm, Insigneo Securities, to comment. According to Finra, Rivero also broke industry rules when he borrowed $500,000 from a client in 2020 without Jefferies' approval and again in 2021 when he attempted to settle a client complaint without telling his firm.
The use of unmonitored messaging apps by financial advisors and employees at wealth management firms has been on the rise in the wake of the Covid-19 pandemic, which reshaped how advisors interacted with colleagues and clients. Messaging apps like WhatsApp and email platforms like Gmail are beginning to play an oversized role in advisor communications, a trend that could increase as more clients choose to communicate via their smartphones.
The Securities and Exchange Commission has been hitting firms with severe fines over the issue of not monitoring or storing financial advisors' text messages or WhatsApp communications. In February, the SEC smacked 16 firms with $81 million in penalties related to its investigation of how the financial advice industry at times mishandles electronic communications, including personal texting, among employees and financial advisors.
Finra has previously penalized firms and individual financial advisors over personal text messaging with clients, but the regulator's focus may be sharpening in the wake of the SEC's investigation, one attorney said.
"It appears now that Finra may be picking up the SEC's scraps and focusing on this as intensely as the Commission has for the past few years," said Andrew Stoltmann, a plaintiff's attorney. "This also could be the regulators using text messages and WhatsApp violations as an add-on issue to other bad behaviors, like a broker borrowing money from a client without telling his firm."
New survey reveals heightened investor concern over market volatility, retirement readiness, and the impact of tariffs on living costs.
Stifel – so far - is on the hook for more than $166 million in damages, legal fees and settlements in investor complaints involving Roberts, a 35-year industry veteran.
Consolidation continues in US wealth management industry.
Tech company democratizes access to US trading infrastructure.
RBC Wealth Management's latest move in New York adds an elite eight-member team to its recently opened Westchester office.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.