FINRA Warns Member Firms of E-Signature Violations

Posted on August 24th, 2022 at 1:35 PM
FINRA Warns Member Firms of E-Signature Violations

From the Desk of Jim Eccleston at Eccleston Law.

The Financial Industry Regulatory Authority (FINRA) has issued a regulatory notice warning financial advisor firms to closely monitor how advisors utilize third-party digital signature platforms amidst a spike in forgery and falsifications.

While digital signature tools have increased efficiency, they also come with a heightened risk of forgery or falsification, according to FINRA. FINRA noted that firms have reported issues with forged signatures from clients on account opening documents, account activity letters, and internal firm documents. FINRA recommended that firms employ digital signature tools to track Internet Protocol (IP) addresses illustrating where the document was signed. For example, firms have discovered cases where the UP address for the client e-signature and the advisor were the same.

In alternative cases, advisors had sent e-signature documents to their own emails to be signed rather than to the client. FINRA additionally recommended that firms rely on advisor support staff to monitor for potential violations.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, finra

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