According to FINRA, Lee Michael Generous was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for falsifying customer and registered representative signatures. Generous electronically signed documents for customers, some of whom were seniors, with their permission. None of the customers complained about this practice. He also electronically signed the name of another representative on more than 100 documents with that representative's permission. Despite having permission, the practice violated recordkeeping rules and led to false attestations.
The documents that Generous signed included required records of the firm such as new account applications, account transfer forms, and opt-in forms for electronic prospectuses. While Generous had the customers' permission to sign on their behalf, this practice creates several problems. First, it undermines the integrity of firm records—signatures are meant to provide evidence that the person whose name appears actually reviewed and agreed to the document. When someone else signs, even with permission, it creates ambiguity about what the signatory actually reviewed and agreed to. Second, it can make it difficult to establish the authenticity of documents if disputes arise later.
The fact that some of the customers were seniors adds another layer of concern. Seniors are often targets of financial exploitation, and while there is no indication that Generous was exploiting these customers, the practice of signing documents on behalf of seniors creates opportunities for abuse by less scrupulous individuals. Proper procedures require customers to sign their own documents, or if they are unable to do so, to provide formal power of attorney to someone authorized to sign on their behalf.
Compounding the violation, Generous falsely attested in a compliance questionnaire that he had not signed or affixed another person's signature on a document. This false attestation transformed what might have been viewed as a well-intentioned shortcut into a more serious violation involving dishonesty. By causing his firm to maintain inaccurate books and records, Generous impaired the firm's ability to maintain reliable records and to demonstrate compliance with regulatory requirements. For investors, this case illustrates the importance of maintaining control over one's own signatures and documents. While it may seem convenient to allow a financial professional to sign documents on your behalf, it creates risks and undermines important protections. Investors should insist on reviewing and signing documents themselves, or if unable to do so, should establish formal power of attorney arrangements with trusted family members or advisors rather than financial professionals who may have conflicts of interest.
