FINRA Rule 4512: U.S. SEC approves electronic signatures

[InfoSec News <alerts () infosecnews org>]

https://www.csoonline.com/article/3391587/finra-rule-4512-u-s-sec-approves-electronic-signatures.html

By Michael P. Magrath
Contributor
CSO
May 06, 2019

As banks and other financial institutions continue to modernize their business 
processes to reduce operating expenses and enhance the customer experience as 
part of an overarching digital transformation, outdated regulations have caused 
some approaches to hit a wall.


Updating the FINRA Rule 4512 for e-signatures

In the brokerage industry, Financial Industry Regulatory Authority (FINRA) Rule 
4512(a)(3) (Customer Account Information) is an example. As it pertains to 
discretionary accounts, it requires member firms to obtain the “wet” signature 
of each named, natural person authorized to exercise discretion in an account.

Members complained that this antiquated requirement raises operational costs 
without providing any meaningful security protections for investors. Further, 
the competitive playing field has been tipped in favor of investment advisers 
who have been able to capture customers’ signatures electronically for some 
time, likely as far back as the enactment of the Uniform Electronic 
Transactions Act (UETA) and the Electronic Signatures in Global and National 
Commerce Act (ESIGN Act). (Disclosure: My employer, OneSpan, provides 
electronic signature solutions and I serve on the Board of Directors of the 
Electronic Signature and Records Association.)

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