Reported by Pete S. Michaels and Alyssa C. Scruggs

Registered reps beware:  your personal device or messaging account is not the right place to conduct your business affairs, and regulators have made clear that they will not look the other way.  In particular, the Financial Industry Regulatory Authority (“FINRA”) and member firms are cracking down on improper communication recordkeeping practices and the use of non-firm applications, including text messages, to communicate with clients.  

On June 1, 2023, FINRA imposed a 15-month suspension and $15,000 fine on Delaina Kucish, a former Edward D. Jones & Co., L.P. (“Edward Jones”) broker for the use of text messages on a personal cell phone to transmit client documents to another individual at the firm.  See Letter of Acceptance, Waiver, and Consent (“AWC”).  The investigation was initiated after Edward Jones self-reported the conduct to FINRA.

Kucish’s AWC

According to FINRA, from February to July of 2021, Kucish, a 21-year industry veteran, used her personal cell phone to send unauthorized text messages containing client information, failed to disclose this to her firm, and misled investigators when questioned. Specifically, the AWC alleges that Kucish falsely denied her wrongdoing when investigated internally by Edward Jones, as well as in response to a FINRA inquiry. FINRA further alleges that, as a result of Kucish’s omissions, Edward Jones failed to preserve business-related text messages. Only in a second written response to FINRA did Kucish admit to sending client documents via personal cellphone text messages. Kucish was terminated from Edward Jones on April 3, 2023 and is no longer registered or associated with any FINRA member.

According to FINRA, Kucish’s refusal to acknowledge the unapproved communications and denial of the existence of such communications when questioned by Edward Jones violated FINRA Rule 2010, which requires brokers to observe high standards of commercial honor.

Read full report: https://www.mintz.com/insights-center/viewpoints/2301/2023-06-20-dont-text-and-trade-regulators-crack-down-use-improper