Off-Channel Messaging Compliance
In the regulated financial sector, every chat is now a business record whether you're monitoring them or not.
In August 2024 alone, the SEC settled with 26 firms for off-channel communication violations, resulting in nearly $400 million in penalties.
If an advisor texts on WhatsApp, iMessage, or LinkedIn, that conversation has to be captured, archived, and review-ready—exactly the way you treat email. Before you decide whether to ban apps, bolt on tech, or rebuild policy, see how the SEC, FINRA, and regulators are framing “off-channel” today.
Compliance Requirements
Why messaging apps create a compliance minefield
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Messaging tools like iMessage and WhatsApp have become the default channel for investors and advisers alike: they’re faster, more convenient, and -let’s admit it- often ignored in legacy email retention policies and antiquated record-keeping tools.
But regulators see no distinction.
If a chat, voice note, or quick DM involves investment decisions, order instructions, client advice, or anything that can influence a securities transaction, it is a business communication, even when sent from a personal phone at lunch.
FINRA Rule 3110 requires firms to capture, review, and be able to reproduce every business-related message. In short: If you can’t show it, you didn’t do it. Failing to archive off-channel conversations cost firms $63 million in January of 2025 alone.
Key Takeaway: Modern messaging speeds up client service, but only if your archive system keeps up.
Why App Bans Fail: Habits & Off-Channel Blind Spots
Okay, so if regulatory bodies are strict about capturing every single message, the easiest thing to do is just ban specific apps for employees, right? Well, no.
When we use specific apps to text, chat, DMs – it’s usually out of convenience and habit. As Jager (2003) explains, “Habits have large benefits for our performance in daily life…saving on cognitive effort.”
Modern conversations happen everywhere. Your archive must happen everywhere, too.
In 2025, client interactions rarely stay inside Outlook or Gmail. A single deal might start in iMessage, pick up on WhatsApp, and finish with a quick Bloomberg Chat ping. Voice notes, disappearing messages, and shared-link threads have replaced the memo.
The Privacy Trap
Early “fixes” often swing to extremes: either banning popular apps or capturing every personal text (raising privacy and data-minimization red flags). Firms need a middle path that:
- captures business content without scooping up family group chats
- works across the apps employees and clients already use
- delivers audit-ready records on demand.
Regulators have made their position clear: convenience does not exempt communications from SEC Rule 17a-4(f), FINRA Rule 3110, or Rule 2110 oversight. Business messages—regardless of device or channel—must be monitored, archived, and available for supervisory review. Ignoring off-channel traffic is no longer a fringe risk; it is a primary exam priority.
Key takeaway: Modern tools speed the deal cycle only if your compliance stack can see—and selectively retain—every business-related message they carry. Forcing employees to change habits by banning apps doesn’t solve the root problem.
Regulatory Landscape 2025
Notice 25-07, 17a-4 audit-trail, and what’s coming next
While it can sometimes feel like the SEC and FINRA operate behind closed doors, both agencies solicit feedback on pending notices and rulemakings. 2025 is no exception. FINRA’s Regulatory Notice 25-07 explicitly invited industry comments on how to bring off-channel messaging into the audit-trail fold, even as long standing e-delivery tenets remain unchanged.
Investors and clients expect instant digital confirmations, not paper letters & faxes, yet any conversation that falls outside a firm’s legacy archive is invisible to supervisors. Thus, the conversation happening around Notice 25-07 is essential to making sure FINRA doesn’t operate behind closed doors. The next wave of proposals is critical to closing the gap between client expectations and exam-ready workflows.
What’s ahead
- Notice 25-07 deep dive and comment themes
- Rule 17a-4 audit-trail alternatives & best practices
- Bridging the client-workflow divide with modern e-delivery tools
Digital Delivery: Closing the Off-Channel Liability
The core e-delivery principles -obtain consent, protect data - haven’t changed, but investors now expect confirmations via WhatsApp, iMessage, Slack, or a secure portal. Sending a paper letter feels about as modern as asking them to fax a response.
Regulatory gap = real risk. When firms ignore off-channel conversations, those messages don’t disappear; they simply become invisible to supervision, creating exam liabilities. FINRA Regulatory Notice 25-07 explicitly invited feedback on how to close that gap for today’s digital channels.
In the headlines: U.S. House bans WhatsApp (June 23 2025)
A memo from the Chief Administrative Officer labeled the app “high-risk” due to its “lack of transparency in data protection” and “absence of stored-data encryption.”
For highly-regulated firms, this signifies that end-to-end encryption alone isn’t a compliance solution.
Enforcement continues.
A pause does not equal a pass. Even after the Private Fund Adviser Rule withdrawal, the SEC still brought 100-plus non-crypto enforcement actions in FY 2024, and FINRA exams rely on the existing rulebook. Firms must operate as usual while new proposals wind through public comment.
The numbers behind the urgency
Three forces drive the surge in fines:
- Data-analytics sweeps that surface texting patterns regulators couldn’t see before.
- Rule 17a-4 audit-trail alternative confusion, leaving firms unsure which storage standard applies.
- Whistleblower tips up 50 % year-over-year, giving exam teams inside information on unmonitored chat use.
Key Takeaway: Regulators aren’t just issuing new rules. They’re inviting dialogue on how firms capture off-channel messaging, while continuing to enforce current rules. Any business chat that falls outside your archive is effectively “invisible” to exams, so modern e-delivery isn’t optional: it’s a compliance imperative.
¹ SEC & FINRA cumulative penalty announcements, 2021-2025.
Privacy Meets Oversight
Capturing business chats without overstepping on the personal
Regulators are beginning to acknowledge the tension between surveillance and investors’ data rights.
In January 2025, FINRA CEO Robert Cook urged the industry to “re-evaluate practices that sweep up retail investors’ personal information where it serves no supervisory purpose.”
That statement, along with similar remarks from SEC commissioners, signals that effective oversight does not require blanket, invasive surveillance.
The rules remain clear: Yes, FINRA Rule 3110 and SEC Rule 17a-4 demand that every business-related message be captured, reviewed, and retrievable.
What they do not require is archiving your employees’ family group-chat. Modern compliance platforms can:
- automatically distinguish business contacts from personal ones;
- retain the pertinent business messages;
- prove supervisory review without over-collecting private data.
$2 B in Fines • WhatsApp Crackdowns • Lessons from Morgan Stanley to Network 1
Enforcement is accelerating—across the entire market
• US $2 billion in fines since 2021. Regulators have penalized firms of every size for failing to capture and supervise electronic communications.1
• Headline proof: U.S. House bans WhatsApp (23 June 2025)—the Chief Administrative Officer called the app “high-risk” due to “lack of transparency” and the absence of stored-data encryption. In tightly regulated finance, end-to-end security is not the same as regulatory compliance.
• Tier-one example: Morgan Stanley Smith Barney - US $15 m (2024) for supervisory failures that let advisers misuse client funds; outdated processes left off-channel chats undetected.
• Mid-market example: Network 1 Financial - US $400 k (FINRA Disciplinary Report, May 2025) for ignoring text and third-party-app messaging. FINRA noted the firm had “no mechanism” to monitor or retain these conversations.
Every case ties back to the same gap. Business messages were happening on consumer apps, and the firm’s archive couldn’t see them. Regulators now treat that blind spot as a primary exam priority, not a side issue.
Takeaways:
Firms no longer have to choose between full compliance and individual privacy—regulators expect you to deliver both.
Whether you clear billions in trades or run a 3-person firm, any unmonitored channel is a live enforcement risk. Capture it, supervise it, or expect it to surface in the next disciplinary report.
Beyond just knowing how to audit your firm, and keeping up to date with evolving rules, there are also considerations to be had regarding the compliance tools you currently use.
¹ SEC & FINRA cumulative penalty announcements, 2021-2025.
Tech Pitfalls to Avoid
Let’s take a quick look at a recent tech pitfall to understand what to avoid:
June 2025 – TM SGNL breach
404 Media was the first to announce the recent TM SGNL breach.
A modified clone of the Signal app—TM SGNL—was marketed to government agencies as a compliant archiving solution. Security researchers revealed that the fork introduced exploitable code paths, exposing classified group chat to external attackers.1
Lesson for financial firms
- Supply-chain scrutiny matters. A compliance badge on the label does not guarantee secure code, especially when software changes hands.
- Selective capture ≠ security hole. Tools that sit on the endpoint, filter personal contacts, and upload only business traffic reduce both privacy risk and the attack surface.
Key takeaway: Vet archiving vendors with the same rigor you apply to custody and trading systems—and ensure any solution separates business from personal messages on BYOD devices.
While marketing material may state one thing, it’s important for your compliance team to look under the hood of the compliance software you choose to use. Comb through the security and data fine print, and ask open-ended questions when vetting a solution.
1 Public reporting: Ars Technica, “Signal Clone Used by Trump official stops operations after report it was hacked,” 5 May 2025.
What enforcement is teaching us
Supervision Must Catch Up - the trend is irreversible.
Messaging apps aren’t a fad. In fact, Juniper Research projects a 45% increase in business chat volume by 2027. That means firms face a simple question:
How do we meet clients where they already are, without falling out of step with SEC and FINRA rules?
The Scope Is Expanding
From Tier-One Banks to Mid-Size Firms
The first wave of recent fines hit tier-one banks, but by 2025 the SEC and FINRA were citing mid-size broker-dealers and RIAs for identical lapses. Enforcement pressure now extends across the industry.
Why Firms Still Miss the Mark
- Employees default to convenient messaging apps, even if they’re not on the “approved” list
- Legacy compliance tools still focus on email, ignoring mobile and chat
- Regulatory expectations evolve faster than internal policies
(Most firms only update manuals annually—or after an exam forces the issue)
Audits Have Turned Proactive
The SEC’s Off-Channel Communication Initiative now requests message samples up front, not just after a tip. If your platform doesn’t capture and reconcile messages from modern channels, you’re already exposed, even before the exam starts.
Takeaway: Modernize capture and supervision now, or plan for your next audit to uncover the gap—because regulators are actively looking for it.
Resources & Support
If you'd like to learn more about Comma Compliance, check out these resources below, and book a demo today.
- Platforms we integrate with, including iMessage, WhatsApp, Signal, and all your regular emails, too.
- Frequently asked questions
- Glossary of key financial and compliance terms
- FINRA 3110 overview - simplified
- FINRA Rule 2210 for Startups
Ready to streamline your audits? Book a demo with Comma Compliance today