March 12, 2014
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, Mark E. Rauguth submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Mark E. Rauguth, Respondent (AWC 2013036434901, March 4, 2014).
From 1997 through March 22, 2013, Rauguth was associated with FINRA member firm Raymond James Financial Services, Inc. ("RJFS"). The AWC asserts that Rauguth had no prior relevant disciplinary history.
Signature Guarantee Procedures
During the times relevant to this matter, the AWC asserts that RJFS's written supervisory procedures ("WSP") provided, in pertinent part, that:
- a signature guarantee should only to be used for clients' documents;
- the guarantee medallion stamp was designed to operate exclusively in the context of security transfers;
- all documents should be signed in the presence of the person who will be guaranteeing the signature;
- documents without original signatures on them, including faxed documents, blank documents, or documents that have been damaged or altered should not be signature guaranteed; and,
- branches are required to keep a branch file of all documents signature guaranteed by the branch and maintain the file for six years.
The Faxed LOA
Despite RJFS' WSP procedures, the AWC alleges that in November 2012, Rauguth used the RJFS' signature guarantee stamp on a faxed copy of a Letter of Authorization ("LOA") in order to facilitate a transaction for an individual who was not an RJFS customer. Also, Rauguth did not witness the requesting party's signature and, further, he failed to independently verify the individual's identity. As such, the cited conduct posed potential violations of the WSPs proscriptions concerning:
- faxed documents lacking original signatures
- in-person verification of guaranteed signature
The contemplated transaction requiring the signature guarantee did not occur because a third-party subsequently determined that the contemplated transaction was fraudulent.
Adding Up The Infractions
For the years 2005 through 2012, the AWC asserts that Rauguth improperly utilized RJFS' signature guarantee stamp for non-customers on 34 occasions, and, exacerbating the misconduct, he failed to maintain in the branch file, photocopies of the guaranteed documents.
According to online FINRA documents as of March 10, 2014, RJFS "Discharged" Rauguth on March 22, 2013 based upon the allegation of "IMPROPER USE OF THE SIGNATURE GUARANTEE STAMP."
FINRA asserts that Rauguth's conduct constituted violations of NASD Rule 2110 and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Rauguth a $5,000 fine and a 15-business-day suspension from association with any FINRA member firm in any capacity.