by Bill Singer
Filling In The Blanks Gets Chase Stockbroker Fined and Suspended
March 18, 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, Gregory Peter Hahn submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Gregory Peter Hahn, Respondent (AWC 2012030971101, March 12, 2013).
Hahn first became registered with FINRA in 2006; and during the times relevant to this matter, he was registered from March 14, 2008 through November 22, 2011, with FINRA member firm Chase Investment Services Corp ("CISC" ). CISC filed a Uniform Termination Notice for Securities Industry Registration("Form U5″) characterizing Hahn's termination as a voluntary resignation. The AWC asserts that Hand had no formal disciplinary history with the Securities and Exchange Commission, any self-regulatory organization, or any state securities regulator.
Incomplete Pre-Signed Documents
Bill Singer
During the relevant period from August 20, 2008, through December 24, 2010, the AWC alleges that Hahn had at least eight customers sign certain incomplete documents -- information such as the date and dollar amount of securities transactions were missing on some forms. Purportedly, Hahn maintained those forms in his files for future use.
Sometime around July 2010, Hahn submitted to CISC a risk disclosure form previously signed by a customer but on which Hahn had inserted (post-customer-signature) the dollar amount of the transaction and other information . Moreover, around August 2010, CISC detected Hahn's use of blank pre-signed forms, and the firm warned him on at least two subsequent occasions about such misconduct. Notwithstanding his firm's warnings, around December 24, 2010, Hahn attempted to submit another blank pre-signed form in connection with one other authorized transaction.
The Beginning Of The End
Following the submission of a Form U5 on November 22, 2011, which characterized Hahn's termination as a voluntary resignation, CISC submitted an amendment on December 14, 2011, to clarify that Hahn had resigned during a routine review in which CISC determined that he had "maintained pre-signed incomplete documents and documents with photocopied client signatures."
The AWC alleged that by having customers sign incomplete paperwork and by subsequently using some of those forms in connection with later transactions, Hahn violated NASD Conduct Rule 2110 (for conduct before December 15, 2008) and FINRA Rule 2010 (for conduct after December 14, 2008).
In accordance with the terms of the AWC, FINRA imposed upon Hahn a $7,500 fine and a six-month suspension from association with any FINRA member in any and all capacities. Hahn specifically and voluntarily waived any right to claim that he was or will be unable to pay the monetary sanction imposed in this matter.
Bill Singer's Comment
Yeah, I know, everyone does it. Among Wall Street‘s dirty little secrets is that a lot of stockbrokers try to short circuit the endless paperwork by having customers pre-sign a lot of forms and documents, which the broker or some assistant subsequently fills in. Then there's the variation on the theme: the old Cut-And-Paste. Sometimes it's viewed as customer service by saving the client the time involved in repetitiously inserting his or her name, address, risk disclosure, investment objectives, and the like.
Registered representatives can call the practice whatever they want but that's not going to change the fact that many employer firms and FINRA will call it misconduct and a violation. You don't get caught, that's one thing. You get caught, it's not as if everyone is going to share your view of "no big deal." In this case, it cost a broker $7,500 and a six month sit-down.
One thing about Hahn that puzzles me is that he apparently submitted his last batch of pre-signed documents in December 2010, but CISC didn't uncover the misconduct until about a year later - in either November 2011 (when Hahn voluntarily resigned) or December 2011 (when the firm amended the U5). I'm not sure what to make out of that significant lag in time. Did Hahn quit because he feared his firm was on to him? What prompted CISC to uncover his conduct and amend his U5? I wish FINRA had filled in those blanks before publishing the AWC.
Also Read, "Till Death Do Us Part Stumps Stockbroker" in which a registered representative submitted a wire transfer form on behalf of a joint account in which both spousal account holders were dead, the signature of the husband was affixed after his death by his surviving wife, and the surviving wife signed an only partially completed form. On top of all of that, the surviving wife was no longer surviving when the stockbroker spoke with the beneficiary daughter, after which the stockbroker completes the form following the death of both account holders and then puts the paperwork into his firm's pipeline for processing without disclosing the circumstances.
READ Bill Singer's analysis of a FINRA disciplinary caseinvolving a registered person who allegedly knew that a statutorily disqualified, barred individual was performing substantive tasks of an associated person: "Statutorily Disqualified Person Cited For Acting In Associated Capacities"