The customer says: Listen, I'm on the road and can't do it. Go ahead and sign my name. It's okay. The stockbroker is uneasy and asks: You sure that you can't sign it and return it to me? With a bit of rising annoyance, the customer explains: Like I said, no can do from the road. You have my permission. Sign off for me. And thus the stockbroker ambles down a customer service road paved with good intentions but which ends in regulatory Hell.
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, Gary D. Rowcliffe submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Gary D. Rowcliffe, Respondent (AWC 2012034111802, July 14, 2014).
Rowcliffe was first registered in 1982 and during the times relevant to this matter, was registered with Northwestern Mutual Investment Services, LLC. ("NWIS") The AWC asserts that Rowcliffe had no prior disciplinary history.
Do Me A Favor
Apparently, sometime in August 2012 a customer of Rowcliffe’s (described in the AWC by the initials “BP”) authorized the registered rep to sign his name on a wire transfer form. That request was purportedly made in order to expedite the transfer of $4,000 in funds from the brokerage account into a a corporate bank account (the company was owned by BP). Lo and behold, on August 7, 2013, Rowcliffe signed the form.
What Part Of "NO" Didn't You Get?
In relevant part, NWIS's written supervisory procedures (“WSPs”), prohibited its registered representatives from signing documents on behalf of a client even if specifically requested to do so by the client. I mean, okay, that’s about as straightforward a “no, don’t even think about doing this,” as one could imagine. You can’t sign a customer’s name without his or her permission. You can’t sign a customer’s name even if he or she gave you permission. All of which doesn’t allow for much, if any, wiggle room. Or, so you’d think.
According to online FINRA records as of July 20, 2014, Rowcliffe was “Permitted to Resign” from NWIS on August 24, 2012, based upon allegations that:
REPRESENTATIVE WAS PERMITTED TO RESIGN AFTER HE ADMITTED TO SIGNING A CLIENT’S NAME ON A WIRE TRANSFER FORM.
Sound Of Silence
Now, howsabout we make a bad situation worse? Having started an investigation of his signature on the wire transfer form, via letters dated May 9 and May 31, 2013, FINRA sent Rowcliffe FINRA Rule 8210 demands for the production of documents and information. On June 13, 2013, Rowcliffe advised FINRA that he did not plan to respond. The intrepid FINRA regulators responded with further demands dated July 30 and August 16, 2013 – to which Rowcliffe failed to respond.
In response to Rowcliffe’s thundering silence, on November 20, 2013, pursuant to FINRA Rule 9552, FINRA issued a Notice of Suspension effective December 16, 2013, if he failed to comply with the prior demands. On December 16, 2013, Rowcliffe was suspended from associating with any FINRA member in any capacity but he eventually provided the requested documents and information.
Loud And Clear
The AWC asserts that Rowcliffe falsified a wire transfer form and failed to timely respond to FINRA staff's document and information requests in violation of FINRA Rules 2010, 4511, and 8210. In accordance with the terms of the AWC, FINRA imposed upon Rowcliffe a $15,000 fine and a 9-month suspension from association in all capacities with any FINRA member firm.
Bill Singer's Comment
A stockbroker signing a customer's name with the customer's authorization is not so rare an occurrence as to be shocking -- wrong or not, it happens with some frequency. Frankly, a lot of registered persons simply assume that if the customer explicitly says "Okay" and there are certain compelling circumstances (in the hospital, on the road, etc.), you can go ahead and sign on behalf of the client. As Rowcliffe demonstrates, that's flawed logic and there are consequences to getting this issue wrong.
If you get caught, however, sometimes, not much, if anything happens. Sure, you violated the WSPs and a manager or compliance officer may call you up and give you a tongue lashing; but, beyond that, these things don't always get caught and, if they do, they often are taking care of quietly and in-house. FINRA may not particularly like when such transgressions get handled in-house and off-the-books but there's lots of stuff that the self regulator doesn't like.
Suffice it to say that Rowcliffe's alleged misconduct seems to have been a one-time event to facilitate a relatively modest $4,000 transfer, and both the signature and the transaction were authorized by the customer. I suspect that the stockbroker could have gotten off with no more than a $5,000 fine and something like a 30-day suspension, or thereabouts. The $15,000 fine and 9-month suspension imposed here (and remember that this is something agreed to via settlement by the registered person) likely mushroomed in consideration of the failure to timely respond to FINRA. It's just not a good idea to jerk FINRA around.
Why Rowcliffe played the part of the human clam in response to FINRA's demands for explanations mystifies me. There may well be extenuating circumstances here that would explain and justify the cold shoulder. I have no first-hand knowledge of such issues, so I will not comment further on this aspect.