FINRA Fines and Suspends Client Associate For Altering IPO Forms

February 8, 2012

For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA") and without admitting or denying the findings, prior to a regulatory hearing and without an adjudication of any issue, Judith Martin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted.In the Matter of Judith Martin,Respondent (AWC 2010023584301, February 2, 2012).

From June 1, 2008, until her termination on June 29, 2010, Judith Martin was employed as a Registered Senior Client Associate ("RSCA") at Wells Fargo Advisors, LLC (the "Firm").  The AWC states that Martin has no prior relevant disciplinary history.

The AWC alleges that a number of the Firm's customers had completed Initial Public Offering ("IPO") Certification Forms in 2008, in order to confirm their eligibility to purchase IPO shares.  On June 21, 2010, Martin reviewed the 2008 Forms and changed the dates and account numbers on 25 of the documents so as to make the Forms appear current.  Pointedly, prior to making those alterations, Martin did not speak with the customers prior to making these changes.  Thereafter, Martin submitted the Forms to the Firm's Compliance department.

By altering the Forms without the customers' knowledge or authorization, Martin violated FINRA Rule 2010; and caused the Firm to maintain inaccurate business records, in violation of NASD Rule 3110(a) and FINRA Rule 2010.  In accordance with the AWC, FINRA imposed upon Martin a $5,000 fine and a six-month suspension from associating with any FINRA registered firm in any capacity and a $5,000 fine.

Bill Singer's Comment

On its face, a fairly uncontroversial investigation and resolution.  Martin improperly altered the IPO Forms and FINRA was correct in reprimanding her.  Frankly, not that uncommon a practice or outcome.  Everyday, men and women at FINRA member firms take paperwork shortcuts.  Sometimes, the reason is to avoid imposing upon a client - particularly when that client just signed a dozen forms but someone forgot to pull out the thirteenth one. Other times, it's simply a matter of supposed convenience.  Then there are the panic situations where a guaranteed rate is expiring tomorrow, the client is out of town, and you forgot to get a signature on a critical application.

Regardless of the reason, I don't want anyone signing my name to anything without my prior permission or changing a form after I've signed it. It's often a very fine line between making unauthorized changes and a criminal charge of forgery.

That being said, let's not fool ourselves. Shortcuts occur everyday at virtually every brokerage firm.  Moreover, you got lots of lower level folks who are pressed and cajoled into doing the wrong thing.  I don't wanna hear about it - just get it done!  Gimme a break, who the hell is gonna know? - if you're not gonna step up, maybe I need to find someone who will.

As such, Martin should not be viewed without some cynicism.  There may be far more nuance to this case than we were told.  Then again, it could all be the Respondent's fault.  Whatever the case, there's rarely a simple explanation for the violation at issue here.

Separately, let me just make a brief diversion.

One of the things about the regulation of Wall Street that persists in driving me nuts (and, admittedly, that's a very short drive these days) is the proliferation of too many fancified job titles in the securities industry.  There are no longer folks whose titles are "stockbrokers."  To the contrary, they've all become Financial Consultants or Financial Representatives.  Sort of like how all the elevator operators have become Vertical Transport Management Officers.  Of course, show me a Financial Consultant or Financial Representative and I'll then show you a card with a comma followed by every variation on the theme of a Vice President.

Which leads me, roundabout as it is, to ask you a fairly simple question about Respondent Martin: Just what the hell is a Registered Senior Client Associate?

For starters, explain to me exactly what a plain, old Client Associate does at Wells Fargo Advisors.  And the difference between what you think a Client Associate does and, say, a Financial Consultant, is just what exactly?

Next, what do you think separates the titles of "Client Associate" and the apparently more exalted "Senior Client Associate?"  Is it like the difference between a black belt and a white belt in the martial arts?

Finally, what's the difference between an Unregistered Senior Client Associate and the Registered Senior Client Associate?  If you can't perform the role of a Client Associate unless you're registered with FINRA, then why bother with the extra title?

More to the point, when will Wall Street's regulators impose some consistency upon all these titles so that consumers intuitively understand who they're dealing with and the relative qualifications of these folks?

I mean, seriously, imagine that you visit a law firm and instead of Bill Singer, law partner or associate attorney, you are confronted with Bill Singer, Licensed Senior Client Legal Professional.

Or, here's a curveball, you enter my office and I'm Bill Singer, Lawyer. When I join the Wells Law Firm, I'm Bill Singer, Legal Consultant; and, subsequently, when I join the Barney Smith Law Firm, I become Bill Singer, Legal Representative. My name stays the same but each new business card presents me with different titles although I do the same job.

While a foolish consistency may indeed be the hobgoblin of small minds, I'm not so sure that Wall Street's diverse and imaginative job titles are a good thing for the industry or the public.  There's more than enough obfuscation on the Street. It goes on at virtually every firm - just take a gander at all the oddball titles at Merrill Lynch, Wells Fargo, Morgan Stanley, JP Morgan, or Citigroup.  A little plain speaking may be a much needed antidote.