Requesting or accepting a signed blank or partially blank form is prohibited. Signing or initialing on behalf of a customer is also prohibited. These requirements apply to both registered persons and non-registered fingerprinted persons, (i.e., administrative assistants). All forms must be fully completed before a customer signs. Any changes after the customer signs requires the customer to initial acknowledging the change.
What is a signed, blank or partially-completed form?
- Having a client sign a blank or partially completed form and you or your administrative assistant complete later.
- Having the client leave certain fields blank and you or your administrative assistant complete later.
- Emailing only part of a form to a client (i.e., sending only the signature page).
- The email with only part of the form confirms that the client did not review the information or receive required disclosures about their transaction.
- Having clients pre-sign forms in case you may need them now or in the future.
- Changing/altering the information on the form after the client signs without their initials to evidence their review (including date change or error corrections).
Clients need to sign completed forms to validate the information for accuracy, ensure all disclosures have been provided, and to help ensure they are fully informed about what they are signing.
Do not use white out. If a change needs to be made to a form, cross it out. If the change is made after the client signed, ensure that the client initials next to the change.
Additional Examples
In addition to the definitions listed above, the following are detailed examples of prohibited practices around having clients sign blank or partially completed forms:
- Leaving date blank: Having the client leave the date blank and you or your administrative assistant add it later. If there is a delay in dating the paperwork, the Firm will not know when the client actually signed the paperwork. Do not instruct the client to leave the date blank.
- Checking boxes after client signs: Updating check boxes on paperwork after the client signs could change the intention from the client on the paperwork.
- Not completing Personally Identifiable Information (“PII”) on forms: This includes having the client not include the social security number, date or birth, etc. on a form for security purposes and you or your administrative assistant add later.
- If these items are included, type “[PRIVATE]” in the subject line to enable encryption.
- Don’t to try to avoid triggering encryption on an email by not completing this information.
- Using Docusign through Docupace will avoid this issue.
Consequences
There are frequent regulatory actions related to signed blank/partially completed forms. The following are real examples from FINRA disciplinary actions. In each of these instances by falsifying documents, the RRs caused their firm’s books and records to be inaccurate.
- RR was fined $25,000 and suspended for 2 years for forging the signature and initials of a customer relating to annuity surrenders. The RR also changed the date on a form so that it appears to have been signed one month prior to when it was actually signed.
- RR was fined $10,000 and suspended for 2 years for forging a customer’s initials on annuity documents. The RR added the customer’s initials without permission and added a date on the documents that was later than the date that the customer signed.
- RR was fined $5,000 and suspended for 2 months for changing information on several forms without the customers’ consent. For two customers, changes were needed to submit forms and the RR made the changes and forged the client’s initials. For another, an IRA transfer form was returned because it should have been marked as a normal IRA distribution. The RR altered the form to mark it as a normal distribution and submitted it without the customer’s initials.
- RR was fined $5,000 and suspended for 20 business days for using a pre-signed letter of authorization to effect periodic distributions from a customer’s retirement account. On at least 8 occasions, the RR added the date to the form and submitted it to her firm.
While having clients sign blank or partially completed forms or signing/initialing on their behalf may seem like a way to expedite requirements or accommodate a client, it is not ethically sound and doing so provides no defense in a complaint that alleges the client did not sign/initial the forms, that they weren’t made aware of product features, or that important disclosures were not provided to them.
Please remember that you are responsible for the work of those non-registered fingerprinted persons who act on your behalf. Please share this field notice with all office personnel who interact with clients, so they are aware of these prohibitions as well.
ESI takes these matters seriously. If alteration of forms is suspected, an internal review is initiated and, if confirmed, may result in disciplinary action.
QUESTIONS
If you have any questions, please contact your supervisor or ESI Compliance at 800-344-7437.
TC134410(0723)1