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Regulatory Sanctions

Broker Falsified Customer Forms and Gets 3-Month Suspension

November 3, 2017

by Howard Haykin


Sandra McCabe agreed to a $5K fine and a 3-month suspension to settle FINRA charges that she falsified forms, which caused her member firm to maintain inaccurate books and records.


BACKGROUND.    McCabe, a Series 7 General Securities Rep residing in Holbrook, NY, has 18 years’ experience with 4 firms. She was associated with Wells Fargo Clearing Services from 2005 until February 2017, when she was U5’d by the firm because “Client Associate retained and utilized blank client-signed ACH forms and a Letter of Authorization when customers requested money transfers.” Ms. McCabe is not currently associated with a FINRA member firm; she has no prior disciplinary history.


FINRA FINDINGS.    On approximately 3 dozen occasions from July 2015 through September 2016, rather than having customers execute new forms, McCabe photocopied and reused signed and partially completed customer forms, including ACH authorization agreements authorizing the transfer of funds. McCabe submitted the forms to her firm with non-original signatures, and in 2 instances, also altered information on the forms. The customers had verbally authorized the underlying transactions, though they had not authorized McCabe's alteration and re-use of existing forms.


In doing so, Ms. McCabe violated FINRA Rule 4511, which … requires member firms to make and preserve books and records as required under FINRA Rules, the Securities and Exchange Act of 1934, and the applicable Exchange Act Rules. An individual may violate FINRA Rule 4511 by causing a member firm to maintain inaccurate books and records. A violation of FINRA Rule 4511 also separately violates FINRA Rule 2010.


FINANCIALISH TAKE AWAYS.    One would think that a broker with 18 years’ experience would have better sense that to use pre-signed blank transaction forms. Well, at least Ms. McCabe had her clients’ verbal authorization for the underlying transactions. That said, the FINRA sanctions in this case are in line with similar “falsification” cases. [See Brokers Copy, Alter, Paste Customer Docs – Then Pay the Price.]


This case was reported in FINRA Disciplinary Actions for September 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017053422801.