FINRA Fines Broker-Dealer $600K for Off-Channel Communications, Recordkeeping Failures
The Financial Industry Regulatory Authority has censured and fined broker-dealer BTIG $600,000 for widespread failures in supervising and preserving business-related communications. The enforcement action follows a multiyear period during which dozens of employees, including senior management, utilized unapproved platforms for firm business.
According to the letter of acceptance, waiver and consent, or AWC, more than 50 current and former BTIG employees used unauthorized platforms between January 2020 and July 2024. Those off-channel communications included thousands of messages between firm personnel and clients.
FINRA’s investigation found that those messages were not limited to administrative matters but included substantive discussions regarding the firm’s investment banking business. Because those platforms were not approved by the firm, BTIG failed to capture or preserve those records at the time they were exchanged, as required by federal securities laws and FINRA rules.
Despite having written policies that prohibited the use of unapproved platforms, FINRA found that BTIG failed to reasonably supervise its staff. Members of senior management were aware of – and personally used – unapproved platforms for business purposes.
The findings state that the executives failed to take necessary steps to ensure the firm was complying with its own prohibitions or that the communications were being properly archived. The matter came to FINRA’s attention during a review of Form U5 uniform termination notices filed by the firm for former employees.
As a result of these failures, BTIG was found to have violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-4, regarding record preservation; FINRA Rule 4511, requiring the maintenance of accurate books and records; and FINRA Rules 3110(a) and 2010, regarding supervisory systems and standards of commercial honor.
In response to the investigation, BTIG implemented a new system in September 2024 to facilitate employee self-reporting of unapproved platform use. The firm also updated its written supervisory procedures to include enhanced monitoring, training and enforcement protocols.
BTIG consented to the fine and censure without admitting or denying FINRA’s findings.
BTIG, LLC has been a FINRA member firm since 2002. The firm, which has approximately 500 registered representatives, is headquartered in San Francisco and provides investment banking, institutional sales and trading, and research services.
Visit the AltsWire directory page.
