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FINRA IRAte About Cut And Pasted Customer Signatures
Written: February 15, 2013

For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority (“FINRA”), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Robert P. Gulan submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Robert P. Gulan, Respondent (AWC 2011027925201, February 7, 2013).

Gulan entered the securities industry in 1998 and by December 2002 was registered with FINRA member firm Fintegra, LLC, where he remained until May 10, 2011.

The AWC alleges that around May 5, 2011, husband and wife customers of Gulan’s signed an IRA distribution request form, which the stockbroker purportedly faxed to Fintegra’s main office for processing.  Upon completion of that transmission, Gulan shredded the original, executed IRA form.

Seems like a fairly straightforward set of facts, right?  Ummm, nope.

Several days after the May 5th faxing, Gulan apparently determined that somewhere between hence and thence, the IRA form didn’t make it via fax to his firm’s main office.  And to make matters worse, Gulan had shredded the original copy with his clients’ signatures.

Now what?

The AWC alleges that instead of obtaining new signatures,  Gulan cut signatures from another document that the married clients had signed earlier that year and affixed the signatures onto a new IRA distribution request form, which he then submitted to Fintegra for processing.

As you may well imagine, FINRA was not happy with this creative approach and deemed it a violation of FINRA Rule 2010 because Gulan did not have his customers’ prior authorization to cut and paste their signatures onto the IRA form. In accordance with the terms of the AWC, FINRA imposed upon Gulan a $5,000 fine and a 30-business-day suspension.

Stroll Down Memory Lane

Seems like it was only yesterday – well, to be accurate, February 7, 2013, when “Street Sweeper“ posted another cut-and-paste FINRA case: “Broker Charged With The Old Cut And Paste Signature Shortcut which discussed In the Matter of Arthur Apostol, Respondent (AWC 2012032570701, February 5, 2013). In that case, while registered person Apostolwas in the process of transferring his customers’ accounts from his former member firm to LPL Financial LLC, the AWC alleged that he submitted new account forms on which he had affixed at least four customers’ signatures by cutting and pasting their signatures from previously executed documents. That AWC alleged that customers had authorized the opening of the LPL accounts but not Apostol’s affixing of their signatures. Further, on at least four occasions, the AWC alleges that Apostol had asked customers to sign blank forms for future use.

Bill Singer‘s Comment

In Gulan you got a broker who had purportedly faxed a perfectly good IRA form but upon learning that the transmission was aborted (and the original document shredded into oblivion), cut and pasted the customers’ signature onto another IRA form.

In Apostol you got a broker who cut and pasted four customers’ signatures onto new account forms (the customers authorized the opening of their accounts) and also had a number of pre-signed blank forms.

Ya wanna handicap this race?

FINRA imposed the same $5,000 fine upon Gulan and Apostol but extracted a 30-business-day suspension from the former and a three-month suspension from the latter. Since there are about 20 business days in a month, let’s say that Gulan got a 1 1/2 month suspension versus Apostol’s 3 months. The dowtime strikes me as a bit heavy, all things considered, but, hey, both these registered persons opted to settle for those sanctions — so who am I to nit pick? Call this one however you see it.


Topics: IRA  FINRA  AWC  Signatures  Bill Singer  BrokeAndBroker  
 
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