A former stockbroker for Wells Fargo Advisors LLC has been fined $5,000 and suspended from the financial industry for six months for changing dates and account numbers on forms without customers’ permission.
In June 2010, Judith Martin altered the dates and account numbers on 25 Initial Public Offering (IPO) Certification Forms that the Wells Fargo customers had completed in 2008, according to documents from the Financial Industry Regulatory Authority (FINRA). The forms indicated that, back in 2008, these customers’ accounts were eligible to purchase IPO shares.
Martin Submits Letter of Acceptance, Waiver and Consent
To settle charges brought by FINRA, Martin submitted a letter of acceptance, waiver and consent (AWC) in mid January. FINRA accepted the AWC on Feb. 2, and agreed not to bring any future actions against Martin based on the same sets of facts. Martin consented to the entry of FINRA’s findings without admitting or denying them.
After Martin altered the IPO forms, she submitted them to the Wells Fargo compliance department. She did not speak with the customers before changing the dates and account numbers to make the IPO forms current, and she did not get their permission, the AWC said.
By altering the IPO forms without customers’ knowledge or authorization, Martin violated FINRA Rule 2010. This rule states that a member, in the conduct of business, shall observe high standards of commercial honor and just and equitable principles of trade.
Wells Fargo Failed
Due to Martin’s actions, Wells Fargo – a FINRA member — failed to maintain accurate business records in violation of National Association of Securities Dealers (NASD) Rule 3110(a), as well as FINRA Rule 2010, according to the AWC.
Martin was employed as a “Registered Senior Client Associate” at Wells Fargo from June 2008 until the firm terminated her employment in June 2010 following the discovery of her tampering with the IPO forms. She has not been associated with any FINRA regulated broker-dealer since her termination of employment. FINRA’s public disclosure records indicate that Martin had not previously been disciplined.
Other Cases Where Brokers Took Paperwork Shortcuts
In March 2011, Freddy A. Medina, a broker with PNC Investment LLC, violated FINRA and NASD rules when he copied a customer’s signature onto an account application and submitted it to his firm. Like Martin’s case. Medina’s action caused the firm to retain and preserve a false or inaccurate record.
The FINRA Hearing Panel Decision on the incident said that Medina discovered he had failed to get his customer’s signature on an account form needed for the customer to purchase a fixed annuity.
The broker should have contacted the customer to take care of it, but he did not. Medina said he was embarrassed about his mistake and did not want to inconvenience his busy customer. In addition, he was afraid the delay would cost her the 5 percent rate he had promised.
As a result, Medina completed the require form by placing a photocopy of his customer’s genuine signature into the form without the customer’s knowledge or consent and submitted the altered document to PNC with other paperwork for the deal, causing PNC to maintain a falsified record. The panel censured Medina and fined him $10,000 plus costs.
According to Bill Singer, a securities attorney who writes his own blog as well as writes for Forbes, brokers may indulge in these paperwork shortcuts to avoid imposing upon a client, especially when one form was overlooked out of a dozen.
Of course there are situations like Medina’s, where a promised rate may change any day, the customer is busy, and the broker forgot to get a signature on a crucial form.
FINRA Rules
While these situations are not the same as outright theft through forged documents, FINRA rules are in place to stop this kind of behavior, and brokers are required to have customers actually sign all required forms and applications, and to seek approval ahead of time if they need to alter a form in any way after it has been signed.
Rules notwithstanding, Singer cautioned investors not to be fooled. Shortcuts happen all that time at nearly every brokerage firm, he said.
Guiliano Law Group
Investors suffering losses or damages from such conduct may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
