Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
March 2010
Linda Marie Allen
AWC/2007010771801/March 2010
Registered Principal Allen's Office of Supervisory Jurisdiction (OSJ) manager was absent from the OSJ for extended periods, but during these extended absences, he signed Delegation Letters that were submitted to and approved by the member firm to delegate his supervisory responsibilities to Allen, who was also registered as a Principal. Allen signed the managerís name on the firmís internal documents with her managerís authorization, with both of them believing that the Delegation Letters were intended to provide her with authorization to act and sign as the manager in his absence from the OSJ. Allenís firm knew that her manager had delegated principal responsibilities to her, but the firm did not know that she had signed his name to firm documents. Allen never attempted to replicate her managerís signature, but signed his name in her own handwriting to firm documents, thereby causing the firm to maintain inaccurate books and records.
Linda Marie Allen: Fined $5,000; Suspended 3 months
Tags:  OSJ         |    In: Cases of Note : FINRA
Bill Singer's Comment
If this isn't one of the more idiotic regulatory cases that I have ever read -- "ever" as in some thirty years, then I can't imagine anything more asinine.  Allen's manager signed the Delegation Letters, which were approved by the FINRA member firm.  You know the definition of "approved," right?  It means that the firm was aware of the delegation and said "no problem."  Allen then signs the manager's name to internal documents -- not external, not forging the customer's signature, not a submission to FINRA or the SEC, but internal documents.  Moreover, even FINRA concedes that both Allen and her manager believed that the Delegation Letters "were intended to provide her with authorization to act and sign as the manager in his absence. . ."

Why the hell was this woman fined and suspended?  No matter how I look at this case, it seems that
1. The Firm implicitly approved the delegation of powers to Allen and that she might well have inferred from the circumstances that she should sign in the manager's absence;
2. Allen did not "forge" the manager's signature but pointedly signed in her own style; and
3. The signatures were affixed to purely internal documents.

While I fully appreciate that to an organization such as FINRA which pays million dollar salaries and loses hundreds of millions in investments that a paltry $5,000 is chicken feed, to many registered persons, that is a meaningful sum -- especially when coupled with a three month suspension.  Unless there is more to this story than FINRA has spelled out in the monthly squib, I think the industry owes Allen an apology for this incredibly heavy-handed regulation and sanction.  Me? I would have reprimanded the firm for not specifying that Allen should not have signed the manager's signature, and then I would have required the firm to send a memo out reiterating that future Delegation Letters should not permit such signing.  I would not have sanctioned the firm, the manager, or Allen.  The fact that things don't always run flawlessly doesn't mean that someone is always to blame.  Sometimes, S*#t happens.  Frankly, you would think that given the revelations of the past year about Madoff and others, that FINRA would be sympathetic to that view.
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