The MFDA is cracking down on falsification of client documents, which it says in a new notice is a continuing problem.
The notice, which was originally provided in October 2015, was revised and re-released to offer guidance to firms and advisors.
It says, “MFDA staff continue to encounter situations where approved persons have created, possessed or used documents such as Know-Your-Client forms, trade forms and cheques [that] have been pre-signed or on which client signatures have been falsified.”
The notice offers nine examples of falsification, including having a client sign a form that is blank or only partially completed, having a client sign multiple forms for use in future trading, and erasing old instructions to input new instructions on a form that’s already signed.
MFDA says supervisors have to play their part to cut down on rule-breaking. In the notice, it says, “Supervisory staff, compliance officers and staff who process documents should receive training in how to detect signature falsification. Branch managers can play a particularly important role in the detection of signature falsification during the course of their tier-one reviews.”
If supervisors fail to detect or admit to falsifying documents, says MFDA, firm “should consider whether the individual should continue acting in that capacity.”
On the heels of this notice, the MFDA approved four settlement agreements related to reps using falsified and pre-signed account forms. In those cases, the reps were fined between $1,000 and $7,500, and two were suspended. MFDA says the actions of these four reps impacted nearly 20 clients.