A Florida-based advisor has agreed to six-month suspension and a $15,000 fine for violations that included conducting business-related communications through the WhatsApp social media app, Finra announced.

Ariel Rivero, an advisor for Miami-based Insigneo Securities, exchanged hundreds of messages with clients through the unmonitored app between November 2020 and January 2022, when he was a rep with New York-based Jefferies LLC, the self-regulatory organization said.

Finra also accused Rivero of violoating securities laws by using the encrypted app to try to secretly attempt to settle a dispute with a client. A third charge by the regulator claimed Rivero borrowed money from a client.

Rivero agreed to the issuance of the findings and the penalties as part of a consent agreement, Finra said. As is usual with such settlements, Rivero neither admitted to nor denied the charges.

The WhatsApp communications were a violation of securities laws that require firms to keep a record of communications with clients, Finra said. The regulator also noted that Jefferies prohibited its employees from using WhatsApp for client communications during the time Rivero was using the app.

The topics of Rivero's communications specifically related to his role as an advisor and included obtaining authorization to buy and sell stocks, and discussions about account performance, among other things, Finra said.

“Because WhatsApp was not an approved channel for electronic communications with customers, Jefferies did not capture or maintain these communications, which it was required to do under the Exchange Act and FINRA rules,” Finra said.

The other charges included a $500,000 loan that Rivero took out from a long-time friend and customer at Jefferies in December 2020, Finra said. The firm prohibited such a loan with a client unless that client was a family member or financial institution. The individual was neither, Finra said.

“To date, Rivero has repaid the customer more than half of the amount he borrowed, and he is current on his payments on the loan,” the regulator said in court documents. “Rivero did not provide any notice, written or otherwise, to Jefferies about the loan, and he did not obtain approval from Jefferies to borrow the money.”

The final charge pertained to Rivero attempting to settle a dispute without his firm’s knowledge, Finra said.

In April 2021, Rivero’s former brother-in-law, who was also a customer, complained to Rivero about losses he sustained in his account from investments in non-traditional ETFs, Finra  said. To rectify the situation, Rivero negotiated with the client through WhatsApp to reimburse his former brother-in-law more than $300,000 in monthly installments of $10,000, the regulator said. 

Rivero never told his supervisor at Jefferies that he agreed to settle with the client, according to Finra

“However, Rivero did not reach a settlement agreement with the customer or make any payments to him,” the regulator said. “Ultimately, the customer filed an arbitration claim against Jefferies and Rivero.”

Jefferies, Rivero and Insigneo did not immediately respond to requests for comment.