Beginning May 6, 2019, the SEC will permit an amendment to FINRA Rule 4512 allowing authorized individuals to use electronic signatures for discretionary accounts held at member firms.

Presently, Firms are required to maintain manually executed signatures for all individuals authorized to exercise discretion in applicable accounts.

The amended rule will:

  • Comply with the Electronic Signatures in Global and National Commerce Act (E-Sign Act), permitting the use of electronic signatures
  • Comply with SEA Rule 17a-3(a)(17)(ii) in regard to discretionary accounts, as the rule does not specify the type of signature required to exercise discretion
  • Give all authorized individuals the option of a manual or electronic signature
  • Monitor electronic signatures to ensure the validity and clarity of the e-signer’s signature pursuant to the E-Sign Act requirements and FINRA staff interpretation of the signature
  • Specify within FINRA Rule 4512(a)(3) that electronic signatures are limited to discretionary accounts only, as the rule requires a record be maintained for each associated person authorized to exercise discretion in an account

Click here to read the Regulatory Notice in its entirety.

Please contact an ARG Analyst with any questions regarding the matters discussed.