According to FINRA, Yann C. Faho was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for causing his member firm to maintain incomplete books and records. Faho used his personal mobile phone to communicate via text message with firm customers regarding securities-related business, and the firm did not capture or maintain these text messages as required.

The text messages included Faho seeking and obtaining authorization to buy and sell stocks, discussing specific investment recommendations, providing market updates, and conversations about account performance. These are precisely the types of communications that must be retained because they document the representative's recommendations, the basis for trades, and what was disclosed to customers.

When communications occur on personal devices that aren't captured by firm systems, there is no record if disputes arise about what was said, what was recommended, or what risks were disclosed. This leaves customers without evidence to support claims of unsuitable recommendations or misrepresentations, and it prevents firms from supervising their representatives' communications.

The use of personal devices for business communications has been a persistent problem in the securities industry, with numerous enforcement actions addressing this issue. The two-month suspension and $5,000 deferred fine send a clear message that representatives must conduct business communications through firm-approved channels that can be captured and retained. Investors should be wary of representatives who want to communicate through personal phones or email addresses, as this may indicate an attempt to avoid firm supervision.