Crackdown on forgeries

MFDA calls for an end to falsified signatures

By: James Langton
October 8, 2015 October 30, 2019
23:00

THERE IS NO VALID EXCUSE for falsifying client signatures, the Mutual Fund Dealers Association of Canada (MFDA) warns mutual fund dealer representatives and their firms in a recent regulatory bulletin.

The MFDA reports that its staff continue to find reps who have various documents – including “know your client” forms, trade forms and cheques – that have been pre-signed by clients or carry falsified signatures.

Falsification includes someone else signing the client’s name, cutting and pasting, photocopying or using other methods to “re-use” a previous signature. It also includes altering information on a signed document without the client initialling the change.

In the bulletin, the MFDA states that between 2012 and 2014, it launched 41 proceedings that included allegations involving pre-signed forms and/or other types of signature falsification. Reps have faced significant penalties, including suspensions, fines and requirements to take educational courses, as a result of these proceedings.

The MFDA, a self-regulatory organization, stresses that its hearing panels “have consistently ruled that falsification of client signatures is not permissible under MFDA rules.”

The MFDA says it doesn’t matter if the signature is falsified for the sake of client convenience or with the client’s consent. And, in cases in which these forgeries have been used to commit other violations, reps have faced additional sanctions, including permanent prohibitions. Signature falsification may result in action from provincial securities regulators, as well.

These actions also affect the ability of reps to produce valid documentation to support transactions that come into question and can harm clients by making documents appear that clients have executed a particular document when they have not.

The bulletin reminds reps that they must not allow their support staff to create, use or possess falsified documents. Reps should proactively address the issue of signature falsification with their support personnel, the bulletin states.

The MFDA bulletin also stresses that dealers are required to maintain policies and procedures designed to detect and prevent signature falsification. Reps who fail to follow these procedures can face internal disciplinary sanctions.