Another Ex-LPL Broker Felled by E-Signature Violations

More than two years after LPL fired a swath of brokers over e-signature violations, cases continue to wind through the Financial Industry Regulatory Authority’s enforcement division. 

Finra imposed a 10-month suspension and $7,500 fine on a former LPL broker in Vernal, Utah, for signing names of at least 160 customers on account documents between November 2019 and April 2021, according to a letter of settlement finalized on Monday. 

James R. Cook, who has logged two decades in the industry, electronically signed 373 account documents, including new account applications, money transfer forms and retirement account contribution and distribution forms, without customers’ prior permission, Finra said.

Although the customers had authorized all the transactions and none complained, Cook violated Finra’s books-and-records rule and its ‘catch-all’ Rule 2010 requiring high standards, according to the settlement. 

Cook settled the claims without admitting or denying the findings. He opened an eponymous registered investment advisory firm in September last year, according to Securities and Exchange Commission records. His license to work as an investment advisor is not affected unless state regulators or the SEC follow up. 

Cook has no record of any client complaints or other disclosures on his BrokerCheck report aside from two disclosures tied to the e-signature violations. 

Finra has brought more than a dozen cases against former LPL brokers over e-signature issues in the past year. Lawyers who have represented brokers have said that some were misled by LPL’s compliance policies around e-signatures which had given the impression that they could sign for customers in certain cases. Finra said in Cook’s case that some of the customers were seniors. 

“LPL had instructed reps how to use DocuSign in instances where the investors, clients were not proficient with DocuSign,” Dochtor “Doc” Kennedy, president and founder of AdvisorLaw in Westminster, Colorado, said at the time of the firings. “At some point LPL’s guidance changed, and LPL is now going back and terminating reps.”

LPL fired Cook in March 2022, according to his BrokerCheck record. Cook said in a comment appended to the disclosure that “everything was completed under the clients directions and to their satisfactions[sic].” He said in the note that some allegations were being clarified but could have involved his sales assistant who no longer works with him. 

A lawyer representing Cook in the settlement was not immediately available for comment. Finra’s penalty was harsher than a two-month suspension and $7,500 fine issued last month against a Massachusetts broker who signed customer names on over 100 documents. 

In July 2023, Finra ordered LPL to pay a $3 million fine as well as two clients a total of $100,000 in restitution tied to allegations that it failed to monitor for forged signatures as well as supervise fund transfer requests.