When Texts Tell a Story: Compliance Lessons from a $750K FINRA Fine

There’s a fascinating chapter unfolding right now in the world of broker-dealer compliance that carries a simple but powerful message: how we communicate matters—especially when it comes to recordkeeping and supervision.

In early 2026, the Financial Industry Regulatory Authority (FINRA) issued a $750,000 fine to Benjamin F. Edwards & Co., a hybrid registered investment adviser and broker-dealer based in St. Louis. The firm agreed to the sanction in a settlement with FINRA after what the regulator described as years of shortcomings in its supervision and preservation of business-related text messages.

This isn’t a tale of deliberate mischief or deliberate misconduct. Instead, it’s a cautionary reminder of how communication practices can inadvertently become compliance gaps if not thoughtfully managed. Like many firms, Benjamin Edwards had policies on the books that prohibited business texting outside of approved software. But policies without reliable systems behind them are like roadmaps without directions: they look useful on paper, but they don’t do much on their own. According to FINRA, the firm lacked effective monitoring, leaving registered representatives—including senior leadership—free to use personal devices and unapproved messaging apps to discuss business matters.

Between October 2019 and December 2023, those informal channels saw the exchange of thousands of business-related texts—notes about investment directives, client details, even investment advice—that were never properly captured or archived as required by federal securities laws and FINRA rules. Some of those messages were recovered after the fact during the investigation, but many weren’t. That’s a problem, because regulators expect firms to be able to produce complete records of their business communications when asked.

What makes this story especially instructive is that the issue first surfaced years earlier in a separate arbitration about recruiting disputes—an event that served as a clear red flag. Despite that, the firm didn’t implement meaningful monitoring until much later. FINRA highlighted this in its enforcement letter, underscoring that supervisory duties include recognizing and addressing those red flags, not just writing policies that assume compliance will magically happen.

It wasn’t all hindsight and reprimand, though. By the end of 2023, Benjamin Edwards had bolstered its controls: updating written supervisory procedures, enhancing training on messaging policies, requesting regular employee certifications, and implementing stronger electronic communications surveillance. But in the regulator’s eyes, those improvements came too late to avoid a sanction.

For firms thinking about their own compliance programs, there’s a practical takeaway here. Technology and communication tools evolve so quickly that what once seemed informal or trivial can now carry significant regulatory weight. Texts and chats aren’t just casual conversations—they’re part of your business record. Ensuring you have systems that both promote compliant behavior and capture what’s needed for oversight isn’t optional. It’s part of the cost of doing business in a digital age.

At GiGCXOs, we work with firms every day to make sure those systems aren’t just well-intentioned lines in a manual, but robust, functional parts of their operational DNA. Because when a regulator comes calling, it’s better to have the story of your communications ready—accurate, complete, and compliant—than to be trying to piece together what was said long after the fact.

Source: (InvestmentNews)