FINRA, the Financial Industry Regulatory Authority, released a Regulatory Notice last week that reported acts of forgery and falsified information among several firms.

There has been an increased number of allegations reported to FINRA about registered reps forging and falsifying signatures of clients as well as some colleagues and supervisors.

The main question is “what can be done to help navigate these situations? FINRA included reminders in their notice regarding how firms can oversee their transactions and establish proof of fraud.

The crucial piece of this puzzle is the need for evidence associated with each digital signature transaction. The use of a comprehensive audit trail is the most valuable source for identifying and proving cases of fraudulent activity.

The extensive audit trail generated for every SIGNiX transaction tracks each individual step. This means that every event or piece of data associated with a digital signature transaction is recorded and accessible. Information, such as each signer's IP address, the locations of signing, and the email addresses of all participants, is included within the audit trail.   If any need for investigation arises, all relevant information pertaining to the transaction is readily available.

Rather than receiving a certificate with limited information, it is this comprehensive audit trail that provides the legal evidence needed to identify and prove fraud.

In addition to reviewing the audit trail, we also recommend utilizing a 2-factor identity authentication system that can be tracked directly to an individual. This could include an SMS text message to a specific phone that includes a one-time password.

SIGNiX supports FINRA’s perspective on preventing forgery and falsification. We recognize it is imperative that the integrity of a firm is upheld. By implementing software with a detailed audit trail, such as SIGNiX’s digital signature software, the ability to investigate these situations is much more attainable.

https://www.finra.org/rules-guidance/notices/22-18

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