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With business travel grounded to a halt and in-person meetings nonexistent over the past year due to COVID-19, employees at financial firms have undoubtedly increased their use of electronic devices for business communications. While sending text and application-based messages may serve as an efficient means of communication in this global remote work environment, firms in regulated industries should ensure that their employees’ communications are compliant with relevant regulatory obligations.

Regulatory guidance provides that if broker-dealers permit employees to use text and messaging applications (apps) for business purposes—or are aware that their employees are communicating via text or messaging apps, even if such use is proscribed—the firms must ensure that those communications are retained.

This article focuses on regulatory obligations for broker-dealers concerning record retention. In that context, we review regulatory guidance concerning the retention of communications sent by text (such as, Short Message Service (SMS)) and messaging apps (such as, WhatsApp and GroupMe) and recent enforcement activity involving these types of communications. We conclude with some practical steps that broker-dealers may consider to enhance compliance with regulatory obligations relating to text and app-based messages.

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