U4/U5 issue Client complaint

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NFA1972's picture
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Joined: 2008-08-11

I have been in the business since 1996, in a large Texas city. I have recently been told that my former B/D has launched an investigation into my book of business, after almost a year away from the previous B/D. To give you a little backstory, In 2012, I moved my practice from one B/D to another When I did this, I lost my association with B/D 1, which is an insurance based B/D, but was able to establish a broker relationship with B/D1, which is not an insurance based B/D, but a regional RIA firm, that allows me to sell insurance as disclosed on my OBA. This was important, because I wanted a situation where I would still be able to maintain my relationship with my B/D1 clients.

To do this, a form is required to be signed by the client and faxed into B/D1, I, and my back office at the new firm completed this for my clients, and met with no resistance whatsoever. Nothing changed for the clients, only the employing B/D changed for me. No accounts, and no money left B/D1. In fact I am not even compensated by B/D1 for taking care of my clients, I simply did so because it was the right thing to do for my clients and the relationships that I have fostered over the many years.

B/D1 has decided to send copies of that Agent Change of Record to my current clients to try and "verify that the client's did indeed want the change of record transaction, and that their signatures were valid on the forms. I have heard from a few of our clients, and walked them through the forms and verified that everything was in order, and the clients have sent that information back to B/D1.

An interesting point to this story is that the form that B/D1 has been sending to my clients has several items of my personal information on it, and those numbers have not been blacked out or obscured. A clear violation of their privacy policy.

So here's what happened. I got a call today from a (sort-of) client, Mr. Client was very upset that his signature apparently is not valid on the transfer paperwork that was submitted to B/D1. I have never met Mr. Client in person, and have only spoken to him briefly a few years ago when I inherited this account from another representative that left the firm. Mr. Client has apparently complained to B/D1 after receiving the letter from them with the form for the agent change. It is my first client complaint ever. Apparently, B/D1 is trying to find grounds on which to terminate my registration, and cause problems for me with FINRA.

I cannot say where the signature came from or who specifically is responsible, but there are several people (myself included) that had access to that form prior to it being faxed in to B/D1. I can tell you that doctoring signatures is not my S.O.P. I have a registered 7 and 66 sales assistant, a non-registered but fingerprinted marketing assistant/receptionist, and in the summers, one or two interns working for college credit.

B/D1 alleges that a forged client signature appears on the paperwork. I assume they will attempt to file a complaint with FINRA. Am I correct that FINRA could potentially fine us and suspend me for a period of time to settle this complaint? I imagine that if the grounds were proven that the signatures were fake, that I would have ultimate liability over my assistants and interns? It would almost certainly cause B/D1 to terminate my appointment with them, harming our clients in the process by cutting off their access to us. Could it potentially end my career at my current firm, and make it very hard to be hired by another FINRA member firm in the securities industry?

Now, let me make this clear. No monetary gain has been had by me from any of this, and Mr. Client cannot claim that he has sustained a loss. The legal definition of fraud is to conceal or mislead for gain, or to cause harm to another for gain. That certainly hasn't happened. To prove forgery, there also has to be an intent to defraud. That does not exist. The client was not harmed in any way. I know FINRA frowns on these types of situations. I have not had contact from FINRA, or B/D1 but I expect that I might any time now.

My team and I have been a blessing to many of our clients, and we do the right thing for them. They do love us. My concern is this. Should I be very worried about losing my job and being forced to find work in another profession?

Amber_M's picture
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Joined: 2011-12-26

Seek good legal help.

An attorney who is local and specializes in security issues. Good luck.

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