In a panel at the FINRA annual conference in May, a segment was devoted to FINRA’s evolving examination focus on the use of text messaging by firms and the issues associated with unmonitored communications channels. Michael Solomon, head of FINRA’s national examination program made a series of compliance observations related to text messaging based on recent experiences engaging with U.S. broker-dealers:
- Have you reviewed your written supervisory procedures (WSPs) recently? FINRA will be looking at what’s changed and whether the relevant WSPs specifically cover the use of text messaging within the firm.
- Can your systems comprehensively ‘ingest’ text messaging? And does that ingestion allow for text messaging to be surveilled and supervised properly? The need to be able to retain voice clips and emojis from within text messages were highlighted as two areas where FINRA has seen compliance issues.
- Have you reviewed what you consider to be a Rule 4530 complaint that needs to be reported? The point was made that a ‘very angry face’ emoji in a text message from a client may well need to be considered as a complaint.
- Have you reassessed how you define ‘business as such’ in a world where text messaging is commonplace? Specifically have you determined what now constitutes a business communication and have you given that updated guidance to employees?
- What is the level and rigor of your training on the use of text messaging? And has the training focused on the ‘tone from the top’ and the dissemination of the business approach to text messaging?
- Have you updated your lexicon(s) to accommodate the differing language used in text messages such as acronyms, emojis and GIFs? And specifically has your email lexicon been updated to catch where communications are taken offline?
- Have you enhanced/updated your text messaging control framework for employees that are in possession of material nonpublic information?
- What is the process as and when red flags have been raised when texting has happened outside of monitored channels? FINRA will be looking at the firm’s approach to discipline.