FINRA Messaging Crackdown Costs Firm $400K – May 2025

FINRA Messaging Crackdown Costs Firm $400K – May 2025 In May 2025, FINRA fined Network 1 Financial for off-channel messaging failures. Learn what went wrong and how to strengthen compliance. Apr 07, 2026 Apr 07, 2026 Sasha leads GTM and customer success at Comma Compliance, transforming compliance archiving into clear, human-centered solutions that teams trust, adopt, and rely on. Sasha finra-fine-may-2025

`FINRA May 2025 Disciplinary Action: Off-channel Surveillance Failure`

In the latest wave of FINRA disciplinary actions online, the regulator’s May 2025 report May 2025 disciplinary report disclosed a $400,000 fineagainst Network 1 Financial for failing to supervise and retain business-related off-channel communications. The memberfirm, like many others cited in recent reports, had no mechanisms in place to monitor messages sent via text or third-party apps.

According to the report, the violations were systemic and involved registered representatives conducting firm business using communication channels that were not subject to the firm’s surveillance systems. And the firm missed -or ignored- multiple supervisory red flags.

Key Findings from the FINRA Action

Representatives used unauthorized messaging platforms to discuss firm-related matters.
The member firm lacked any mechanism to monitor or archive these communications.
Supervisory red flags indicating off-channel usage were overlooked.

This case highlights the increasing regulatory emphasis on capturing all business-related communications - regardless of the platform used. These findings mirror a broader spike in FINRA’s displinary actions over the past year, underscoring FINRA’s sharpened focus on mobile messaging

Types of Messages Identified by FINRA

The communications in question were not limited to informal or administrative content. Examples included:

Customer instructions regarding share transfers
PIPE (Private Investment in Public Equity) deal discussions
Financial advice related to IPO participation

Each of these categories falls under SEC and FINRA recordkeeping and supervision obligations.

Common Messaging Platforms Implicated

While FINRA did not explicitly name the apps used in this case, common platforms that frequently raise compliance concerns include:

WhatsApp
iMessage and SMS
Signal
Telegram
WeChat
LinkedIn and Facebook Messenger

These platforms are widely adopted for their convenience but often fall outside firms’ existing surveillance infrastructure.

Implications for Compliance and Surveillance Programs

The enforcement action underscores that convenience does not exempt communications from regulatory scrutiny. Business communications—regardless of origin—must be monitored, archived, and available for supervisory review.

Firms should consider the following steps:

1. Update Written Supervisory Procedures (WSPs) to specifically address off-channel and mobile messaging.

2. Conduct audits to identify communication platforms currently in use but not being monitored. (A full breakdown of how to audit your current comms is in this recent article.)

3. Deploy tools capable of capturing and archiving communications across both corporate and personal devices.

4. Provide ongoing training to staff on what constitutes business-related communication and the firm’s expectations for recordkeeping.

Conclusion

Off-channel communication is a recurring issue in recent enforcement activity. Firms should no longer treat it as a fringe risk. Effective capture and supervision systems are essential to maintain compliance and avoid costly regulatory outcomes.

This article is for informational purposes only and does not constitute legal or compliance advice.

Sasha leads GTM and customer success at Comma Compliance, transforming compliance archiving into clear, human-centered solutions that teams trust, adopt, and rely on.