November 28, 2017
It's holiday time and that means another year about to go under your belt. Which also means that you're getting ready for another round of annual compliance meetings, annual compliance questionnaires, and annual reviews of your book of business (and you're once again hoping that your firm doesn't uncover that short-cut you took with some paperwork and doesn't ask too many questions about the losses in that nice widow's account). In a recent FINRA regulatory settlement, we consider the fine and suspension imposed upon a registered rep who engaged in an excess of customer service when it came to completing forms and obtaining original signatures. Bah Humbug! Now that's the holiday spirit!
Case In Point
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, Danielle Jean McAniff submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Danielle Jean McAniff, Respondent (AWC 2016051104501, November 20, 2017).
McAniff entered the securities industry in 2010 with FINRA member firm Edward Jones, first became registered in 2012, and in 2013, she also became associated with that firm as an Investment Adviosr. In September 2016, McAniff registered with another FINRA member firm. The AWC asserts that McAniff "has no relevant disciplinary history."
Filling In The Blanks
The AWC alleges that during the relevant period of June 2013 to June 2016, McAniff engaged in and permitted her office administrator to engage in a practice of having McAniff's customers sign blank/incomplete forms or using photocopied customer signatures. The AWC further alleges that McAniff or her office administrator completed the cited forms and submitted them as purportedly original documents to Edward Jones. The AWC characterizes the submitted forms as including asset transfer requests; 529-plan enrollment application and disclosure forms; and authorization for electronic fund transfers and recurring withdrawals. During the relevant period, the AWC alleges that the cited conduct involved at least 15 customers and 40 documents.
The AWC asserts that during the relevant period, Edward Jones's written supervisory procedures ("WSPs") required original and authentic client signatures on all documents, and prohibited its employees from:
The AWC asserts that McAniff was aware of the above WSP policies "by virtue of the Firm's annual training and audit process."
- having customers sign blank/incomplete forms; and
- photocopying/manipulating a client's signature on any document.
Online FINRA BrokerCheck records as of November 28, 2017, disclose under the heading of "Employment Separation After Allegations" that Edward Jones permitted McAniff to resign on July 21, 2016, based upon allegations that:
Permitted to resign after the completion of an internal review regarding failure to comply with the Firm's Signatures policy.
The AWC alleged that McAniff's conduct constituted violations of FINRA Rules 2010 and 4511 (by causing the firm to create and maintain inaccurate books and records, in violation of §17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 thereunder). In accordance with the terms of the AWC, FINRA imposed upon McAniff a $5,000 fine and a two-month suspension from association with any FINRA-regulated broker-dealer in any capacity.
Bill Singer's Comment
All in all, a well-presented settlement by FINRA.
Associated and registered persons at FINRA member firms often roll their eyes at stories involving fact patterns similar to the McAniff AWC. When some of those eye-rollers are my law firm clients, they often explain, excuse, or otherwise depict their "fillin' in the blanks" conduct as a form of "customer service." In many cases, their version is understandable -- but understandable does not transform their actions into compliant conduct and it does not generate a free-pass from any industry regulator.
When I'm listening to a client's version of events, they often start out the conversation by admonishing me that:
- You don't understand, Bill, there's so much paperwork and a lot of it is duplicative and I asked the client to fill out 20 forms and make 40 signatures, but after she left our office, we found out that she only filled out 18 forms and left out five signatures. I wasn't going to call back the client and look like an asshole because we forgot to double-check the executed forms. After all, she wanted to open those accounts and her completion of most of the documents and her signing on most of the signature lines confirms that.
- The client was annoyed to start with when I told him that we needed 40 signatures on 20 forms. He said that he was busy at work and getting ready to take a three-week trip to Europe. He told me to fill everything in for him and sign his name. When I told him that I couldn't, he went ballistic. So, sure, he came into the office and complained about wasting his time. After he left, we realized that we forgot to give him an Addendum Page to sign and that he had forgotten to sign twice on one page that he completed. When we uncovered all of this, he was already in Europe and there was no way that he was going to do anymore paperwork. I finished the form and copied his signature because I didn't want to lose his business.
For whatever it's worth, I held both a Series 7 and 63 for a number of years, and, I do understand my clients' take on this issue. Also, I appreciate that you weren't trying to rip off the client but merely attempting to expedite the opening of an account. Keep in mind that the McAniff AWC conceded the following in Footnote 1:
The Firm did not receive any requests from customers to cancel or otherwise reverse the transactions at issue.
In the end, how did all that enhanced customer service a la filling in the blanks and cutting-and-pasting a customer's signature work out for you? You're in my law office facing your firm's threat to fire you. You're under investigation by both your firm and FINRA. You're looking at losing your job and possibly having to pay a fine and serve a suspension. Oh, and don't forget, you also need to write out a substantial check for my legal fees and then go purchase a year's supply of Maalox because FINRA is in this for the long haul. So. . . for those of you who think that you're going the extra mile for your customer by completing forms and adding signatures, think again.