A Florida-based broker has agreed to a 30-day suspension for using the social media platform WhatsApp to conduct securities-related business with overseas customers, according to a letter of acceptance, waiver and consent by the Financial Industry Regulatory Authority.

Paul Falcon of Boca Raton also agreed to a $5,000 fine for the violation, the letter said.

According to Finra, Falcon exchanged a total of 894 WhatsApp communications between November 2017 and June 2019, many of which concerned securities-related business with three different customers of Aegis Capital Corp., his employer of 13 years. Aegis was not able to capture the communications Falcon sent and received through WhatsApp Messenger, Finra said, noting that Falcon primarily used his personal cell telephone to communicate via WhatsApp, but occasionally used his desktop computer at Aegis as well.

Finra also pointed out that Falcon had disclosed using WhatsApp for business purposes in November 2017 when he completed Aegis’ personal activity questionnaire. He noted that he used the third-party application to communicate with overseas customers several times a month on his personal cell phone. Falcon signed an Aegis Telecommunication Policy Acknowledgement that same day, confirming that he would use only communication devices the firm issued and approved and that the firm prohibited the use of text messaging to conduct business.

But Finra said Falcon continued to use WhatsApp for business-related communications with the overseas customers during the relevant period.

It said Aegis did not approve Falcon's use of WhatsApp Messenger, nor did it capture the communications sent and received through WhatsApp so that it could maintain and preserve them.

As a result, Falcon violated rules from Finra and the Securities Exchange Act of 1934, which in part stipulate that all communications sent and received relating to a member business must be maintained and preserved by a member firm for at least three years.

Moreover, Aegis's written supervisory procedures provide that electronic business communications can only be accessed and transmitted through Aegis-sponsored systems so that Aegis can review, monitor and audit the communications. Aegis's procedures further provide that employees can only use mobile devices Aegis has issued and authorized, according to the letter of acceptance and waiver.

Falcon agreed to the sanctions without admitting or denying the findings, the SEC said.