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Regulatory Sanctions

Brokers Mortally Wounded by Shooting Blanks

June 8, 2018

by Howard Haykin


Customer-signed but otherwise blank or partially completed customer forms are all too common. However, if you’re caught ‘holding the goods’, odds are you’re going to get fined and suspended by FINRA, and then lose your job.


CASE ONE.   A ProEquities broker ... with 30 years’ experience with 4 firms, agreed to a $5K fine and a 3-month suspension.

From 2013 through mid-2016, the broker maintained customer-signed but otherwise blank forms for approximately 130 clients to submit to ProEquities in connection with mutual fund exchanges. The pre-signed forms, which were Mutual Fund Investor Acknowledgements and Universal Switch Letters, were completed and submitted to the firm following execution of the transactions. The broker’s actions were in violation of ProEquities WSPs and he was promptly U5’d for his conduct. [April 2018, FINRA Case #2016050244501]


CASE TWO.    An Edward Jones broker, with 5 years’ experience with 2 firms, agreed to a $5K fine and a 2-month suspension. 

From June 2013 to June 2016, the broker used or permitted her office administrator to use customer-signed blank and incomplete forms, along with photocopied customer signatures, to open customer accounts, record customer financial information and authorize customer transactions. The broker or her office administrator then completed the forms and submitted them to Edward Jones as original documents. This violative conduct involved at least 15 customers and 40 documents over the 3-year period.  [January 2018, FINRA Case #2016051104501]


FINRA Rule 2010 requires all associated persons to "observe high standards of commercial honor and just and equitable principles of trade." Causing customers to sign incomplete or blank forms, or using photocopied customer signatures, violates FINRA Rule 2010.
FINRA Rule 4511 requires each member to make and preserve books and records in conformity with §17(a) of the Exchange Act and Rule 17a-3 promulgated thereunder. A violation of FINRA Rule 4511 also constitutes a violation of FINRA Rule 2010.


For details on these cases, go to ...  FINRA Disciplinary Actions Online, and refer to the respective AWC Number.