Susan Mae Karn, a broker with Thrivent Investment Management in Wimbledon, ND, settled FINRA charges she allowed a customer to sign relatives’ names on life insurance applications, and before Karn submitted them for processing, she signed the insurance applications and certified that she had witnessed each of the proposed signatures on the insurance applications.  She also allegedly falsely certified on the  Representative’s Information Supplement document for each insurance application that she had personally seen each proposed insured at the time the application was completed. 

FINRA further found that one of Ms. Karn's clients completed an application to purchase a municipal bond fund by signing her name on an electronic signature pad, and later that same day, Karn signed the client’s name on the electronic signature pad and thereby affixed the client’s signature on an application without the client’s authorization, consent or knowledge.  The application with the fraudulent signature was the one processed by the firm and sent to the client, rather than the one with the client’s authentic signature. 

When the firm questioned Karn about the authenticity of the client’s signature, she initially said it was the client’s original signature, but later admitted that she had penned the signature.  By her actions, Karn misled her firm during its internal investigation into a customer complaint.

BTW, Ms. Karn was fined $5,000 and suspended 6 months.  This is FINRA Case #2010022067901.   [April 2011 Disc. Actions] 

C-I Notes:  FINRA repeatedly points out that the broker certified to the authenticity of customers' signatures, when she knew that she or others had signed.  Admittedly, once the account documents were signed by someone other than the customer, this broker really had no choice but to lie - well, she did, but she seemed to be a point of "no return."   Considering that forgery was committed on customer-approved transactions, one can only imagine that the broker had alternatives.  We can think of at least:

Alternatives.  Presuming the signings were done to accommodate a customer who could not readily sign for himself or herself, the broker might have obtained an LOA (letter of authorization) from customer(s) that authorized another to sign as his/her representative.  Of course, the firm should not permit one of its brokers to be so designated with such authority.  Also, it would make imminent sense for the broker to get a supervisor's approval before seeking out such an LOA.

For our further thoughts on alternatives - including an "amnesty program," go to our Behind The News page, - "Forgery: Brokers Have Alternatives," posted 4/29/11.