by Bill Singer
Former Chase Broker Initials And Signs His Way Out Of A Job
April 4, 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, Taylor C. Parkin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Taylor C. Parkin, Respondent (AWC 20110269994101, March 27, 2013).
Parkin entered the securities industry in April 2007 when he became registered as a General Securities Representative through Chase Investment Services Corp. ("CISC"), which terminated him on March 24, 2011; thereafter, Parkin was registered with Royal Alliance Associates, Inc. from April 25, 2011, until June 20, 2011.The AWC asserts that Parkin had no prior disciplinary history.
Un-Linked
Bill Singer
The AWC asserts that one of Parkin's customers had linked brokerageand in-house checking accounts, but that the link had become accidentally severed at a time when thecustomer needed money moved from the brokerage account to the checking account - and, of course, the customer was unavailable to sign the form needed to re-link the accounts. Isn't that always the case - everything always goes wrong at the worst possible time and in a manner that will cause the worst results.Likely doing what he felt was offering sterling "customer service," Parkin affixed the customer's signature to the account-linking form.
The AWC does not state whether the customer had authorized Parkin to sign on his behalf or was even aware that Parkin needed another signature. On the scale of things, not necessarily the worst of industry compliance and regulatory violations, but, nonetheless, good luck trying to explain such conduct to your compliance department and some stickler of a regulator.
If At First . . .
Apparently, another of Parkin's customers had made several trips into the office to sign formsrelating to an annuity purchase. At some point, it seems that Parkin changed some of the language on the form pertaining to the basis upon which he perceived that the the annuity rider he had recommended was suitable. Unfortunately, the AWC does not address whether Parkin fully explained to the customer all the changes that he had made on the form (I'm going to give him the benefit of that doubt). According to the AWC, "In order tosave the customer from having to make another trip into the office to initial the change tothe form, Parkin initialed the form on behalf of the customer." Another critical omission in the AWC is whether the customer had authorized Parkin to initial the form.
Online FINRA records as of April 3, 2013, indicate that Parkin was "Discharged" by Chase Investment Services Corp. on March 14, 2011, based upon allegations that:
REGISTERED REP WAS TERMINATED AFTER ADMITTING TO AFFIXING BOTH INITIALS AND SIGNATURES ON CLIENTS DOCUMENTS
FINRA alleged that Parkin's conduct above constituted a violation of FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Parkin a $5,000 fine and a three-month suspension from associating with a FINRA member in anycapacity.
Bill Singer's Comment
When all is said and done, registered persons simply cannot be signing documents on behalf of customers without jumping through a whole lot of compliance hoops. To the extent that such a practice is even permitted by a brokerage firm (and few do), the exceptions typically require prior confirmation by the customer that the broker is authorized to enter a signature on the customer's behalf. In such an extreme case, typically necessitated by an emergency, best practices would normally require that at the first available opportunity, that the client be sent a new form to sign and that such a document then replace the prior version. Similarly, the customer's consent and authorization to any signing by another person should always be secured in writing prior to undertaking the act. Needless to say, from a career survival perspective, a registered person should always obtain written approval from the employer brokerage firm.
The knee-jerk reaction to this fact pattern is to erroneously assert that the signing broker has committed a "forgery." The typical statutory definition of forgery involves an intent by the defendant to defraud, deceive, or injure through the false alteration of some written instrument. In Parkin's case, there does not seem to have been any intent by him to defraud, deceive, or injure. Moreover, it is questionable as to whether affixing the customers' signature or initials constituted a "false" act if, in fact, the customers were aware of the changes to the forms and had authorized Parkin to sign on their behalf (which is not clear in the AWC).
Regardless of the nuances of criminal law or the niceties of Wall Street compliance and regulation, at some point there is "customer service" and at another point there is a violation. No registered person should ever initial or sign on behalf of a customer without first securing prior written authorization from both the employer firm and the customer. Remember that the road to Hell is filled with good intentions.