FINRA Cautions Firms to Monitor for Forged Digital Signatures

In a regulatory notice, FINRA reminded member firms of their obligation to monitor for digital signature falsification.

Following an increase in reports involving forged or falsified customer signatures, FINRA encouraged firms to evaluate their supervisory systems to detect possible instances of signature manipulation. FINRA has found that signature forgery is particularly common in connection with:

• account transfers where representatives facilitated the transfer process by digitally signing forms on behalf of customers; and
• securities transactions where disclosure forms concerning the customer's investment objective and risk tolerance had been forged.

Additionally, FINRA found that through digital signature audit trail and email correspondence review, firms were able to identify instances of (i) forgery of personal data, (ii) location discrepancies where the customer and the signee are in different locations (in the case of digital signatures), (iii) similarities in IP addresses, where the address of a representative was the same as the address listed for the customer, and (iv) email address manipulation in an attempt to conceal customer information.