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- FINRA RegNote 17-40: AML/KYC Requirements Under FINRA Rule 3310
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- FIFO: Senate Plan Lets Mutual Funds Skip A Tax Change That Hurts Individual Investors
- FINRA Introduces New Functionality and Design to Fund Analyzer
- Oyster Bay, NY, and Former Top Official Charged with Defrauding Muni Investors
- State Street Challenging BNY Mellon As Largest Custody Bank
- Changes to FINRA Advisory Committees: Phase 1
- SEC Approves CAT Fee Dispute Resolution Process
- Boston-Area Consultant & Friend Settle SEC Insider Trading Charges
- SEC Chair Clayton: Statement on Status of the Consolidated Audit Trail ('CAT')
- Goldman to Launch $5bn Fund with China Investment Corp.
- Wells Fargo Launches Robo-Adviser Targeting Millenial Investors
- Barclays Fails to End U.S. 'Dark Pool' Class Action
- Goldman Sachs' Chief Risk Officer, Craig Broderick, to Retire
- Time to Renew FINRA Registrations - B/D, IA, Agent, IA Rep, Branches
- New Jersey’s Next Governor Could Be a Democrat Who Worked at Goldman Sachs
- FINRA New York Region Networking Seminar - December 1st
- SEC Approves “Pay-to-Play” and Related Rules for Capital Acquisition Brokers
- Hedge Fund Giant Paul Singer Targeted for Destruction by Steve Bannon
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NEWSLETTERS & ALERTS
Altered States – FINRA Sanctions
[Photo: William Hurt & Blair Brown in the 1980 movie, "Altered States"]
by Howard Haykin
FINRA commonly issued sanctions against registered individuals – usually brokers – for altering customer documents. For June, FINRA reported 7 such cases. For example, brokers add or change information on customer account documents, or they use signatures from previously submitted documents.
It’s impossible to know how prevalent the practice is – but it’s got to be frequent. That may be why FINRA tends to come down hard on the 'offenders' who get caught. The fines may typically be small ($5K), but the accompanying suspension can extend beyond one year. See below the 7 cases cited this month by FINRA.
FINANCIALISH TAKE AWAY. Broker-dealers might consider using the below listed cases - along with others - in their CEP sessions for brokers. Nothing like emphasizing the downside of altering firm documents. No matter ‘how you slice it’, it’s bad business.
These cases appeared in FINRA Disciplinary Actions for June 2017.
- Adriane L. Cagle was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months … to settle FINRA charges that she altered several documents that had already been signed by customers and signed as a witness to customer signatures on certain documents without having actually witnessed the customers sign them. (FINRA AWC #2016051146801)
- Matthew Ernest Garbarino was fined $5,000 and suspended from association with any FINRA member in all capacities for four months … to settle FINRA charges that he obtained from customers of his member firm executed, but partially blank, signature pages from change-of-broker forms issued by several annuity companies. He later copied the signature pages and created new change-of-broker forms by filling in numerous annuity contract numbers on the blank portions of the pages containing the photocopied signatures. (FINRA AWC #2014043695701)
- John Edward Olinghouse was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for one year … to settle FINRA charges that he altered customer documents he then submitted to his member firm, which caused the firm to have inaccurate books and records. (FINRA AWC #2015045276901)
- Eric Eugene Ott was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for 13 months … to settle FINRA charges that he signed a customer’s name to two insurance applications without the customer’s knowledge or consent [along with charges of unreported outside business activities]. (FINRA AWC #2016049496201)
- Eric Stanley Springer was fined $5,000 and suspended from association with any FINRA member in all capacities for one month … to settle FINRA charges that he photocopied customers’ signatures from documents already on file with his member firm, and affixed the photocopied customer signatures onto the signature pages of various forms required to be completed …. (FINRA AWC #2013038505301)
- Robert William Ward was assessed a deferred fine of $7,500 and suspended from association with any FINRA member in all capacities for nine months … to settle FINRA charges that he engaged, and permitted other firm employees in his office to engage, in a practice of obtaining customer signatures on blank or incomplete forms and photocopying customer signatures from previously signed documents [along with charges of failing to update his U4 for tax liens]. (FINRA AWC #2015045555901)
- George Marshall Warner was fined $5,000 and suspended from association with any FINRA member in all capacities for 30 days … to settle FINRA charges that he altered various customer documents on at least five occasions after the customers had already signed them. (FINRA AWC #2014043727001)