Communication via personal text messages or personal email could be a major warning sign that your stockbroker or investment advisor is engaging in investment and securities fraud. While not all uses of personal devices for broker-client contact are cause for concern, these messages are often difficult to regulators and firms to monitor. Because these parties need to monitor communications to prevent fraud both internally and by external enforcement, the use of unapproved devices has become a fineable offense. Regulatory authorities are cracking down on these practices to better protect investors and their holdings. Firms are responding with internal compliance measures—or paying the price.
Morgan Stanley is the latest firm to be slapped with a hefty fine for the use of unapproved personal devices, according to a recent report. In its second-quarter 2022 earnings statement, Morgan Stanley disclosed a $200 million fine “related to a specific regulatory matter concerning the use of unapproved personal devices and the firm’s record-keeping requirements.” This is in response to conversations the firm has had with the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).
Morgan Stanley isn’t alone. Since the COVID-19 pandemic has moved more investment professionals to out-of-office settings, the use of personal devices has proliferated. As a result, major investment firms like JPMorgan, Citigroup, Deutsche Bank AG, and HBSC Holdings Plc have all reported a range of related concerns such as fines, regulatory scrutiny, or other internal actions because of regulators’ crackdown on personal device use.
As a result, firms are now closely monitoring broker-client messages and even outright banning communications from private devices or platforms to stay compliant with Financial Industry Regulatory Authority (FINRA), SEC, and CFTC requirements. If your broker is sending text messages or emails from a personal phone number or email address, consider it a possible red flag for fraud—or, at the very least, a potential breach of company policy and your broker’s duty to best serve your interests. Unmonitored messages from an investment professional may be an attempt to circumvent regulatory oversight or sell offerings not approved by the broker’s firm. A broker that needs to shield conversations from the firm could be engaged in fraud or other illegal investment activity—and a firm without safeguards in place could be failing to properly supervise its employees. Consider reaching out to an experienced investment fraud attorney to explore your options.
Is Your Broker Raising Red Flags?
If personal texts and emails from your broker are accompanied by substantial investment losses and you’re concerned about fraud or misappropriation, reach out to the Forman Law Firm, P.C. The Forman Law Firm is exclusively focused on helping victims of investment and securities fraud hold bad actors accountable. Texas attorney Bryan Forman knows the top broker red flags and is positioned to help wronged investors with over 30 years of securities fraud experience. To learn more, and to schedule a free consultation, reach out to the Forman Law Firm, P.C. at 512-306-8188 today. You can also reach us through our online contact form.