|
|||||||
|
NASD Enforcement Activity
Accommodation Forgery Mark Koerner, Regional Counsel for Enforcement, NASD, spoke on current enforcement issues for the NASD at the Mesirow Financial B/D and IA Services 2005 Conference which recently was held at Wyndham Hotel in Chicago, Illinois. Mr. Koerner's thoughtful discussion regarding enforcement included the current enforcement environment and the violations that have the focus of the enforcement staff at the NASD. While the violations obviously include theft and conversion, selling away, net capital violations and various sales practice issues related to the sale of various products, including variables and mutual funds, and the related supervision issues, a surprising observation was made regarding the increase in accommodation forgery cases. These cases currently represent approximately 10% of the enforcement activity of the NASD. Accommodation forgery generally occurs where a registered representative signs client documentation, on behalf of a client, with the verbal consent of the client. It was speculated that this trend is probably related to the substantial increase in the amount of paperwork that is required to open an account and or address the disclosure requirements of certain products. To that end, the majority of these cases generally occur when a client fails to sign one of any number of documents, and with the verbal consent of the client, the registered representative signs "on behalf of the client". Ultimately, while representing a serious regulatory violation, these are not cases the NASD enjoys prosecuting, since they are usually against registered representatives with little or no customer complaint or disciplinary history, and the violations appear on the surface to fall within the concept of no harm no foul. However, the violation is clearly serious from a regulatory aspect, and historically results in minimum sanctions of $5,000.00 fines and suspensions of 20 days. As a result of this trend, it is recommended that firms review the new account documentation process and assure that those charged with supervision of the sales force take steps to remind their sales force of the significant regulatory exposure that can result from signing client documentation based upon a verbal consent of clients. |
|||||||
| Michael Schaps, Vice President Broker/Dealer Division 281-863-6116 |
|
|||||
| Published
and Copyright© 2002 MGL Consulting Corporation all rights reserved
and all of the releases provided are protected by copyright and other applicable laws, treaties, and conventions. All reproductions, other than for an individual user's reference, are prohibited without prior written consent. |
|
| Click here to Signup | |