FINRA Suspends Broker for Falsifying Client Authorization Records

FINRA suspended a broker for falsifying client authorizations on multiple fund transfers between customer accounts. 

According to the AWC, the broker’s firm required representatives to record specific information in its system when transferring customer funds between accounts. FINRA stated that this information included whether the authorization was verbal or written, the method used, the person who obtained it, the date and time, and the reason for the transfer. FINRA noted that the broker was the representative of record for both a customer’s IRA account and a jointly held brokerage account the couple used to manage household expenses.

FINRA found that the broker "caused funds to be transferred from the IRA account to a joint account" of which the broker and his wife were owners on 26 occasions. FINRA stated that the customer, who was the broker’s spouse at the time, had provided express authorization for only 11 of these transfers. FINRA determined that for the remaining 15 transfers, totaling $13,543, the broker failed to obtain preauthorization, but nonetheless entered information in the firm’s system indicating that he had obtained his spouse's approval on specific dates and times and that she had provided a reason for each transfer. FINRA noted that the transferred funds were used to cover joint household expenses.

FINRA determined that the broker violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").