Thrivent Investment Management Fined $325K

FINRA Censures and Fines Thrivent

The Financial Industry Regulatory Authority (FINRA) has imposed a censure and $325,000 fine on Thrivent Investment Management. The disciplinary action stems from Thrivent’s failure to establish and maintain an adequate supervisory system to detect electronic signature forgery or falsification. According to FINRA’s order, from July 2017 to the present, approximately 15 Thrivent registered representatives allegedly electronically signed clients’ names on over 260 documents, including documents that were required books and records of the firm.

This lack of supervision allowed representatives to engage in alleged forgery incidents without proper oversight. FINRA’s investigation revealed instances where representatives sent documents to their own email addresses or used their own phone numbers for authentication codes, raising red flags that went unaddressed due to inadequate supervisory procedures.

The consequences highlight the importance of robust supervisory systems in the financial industry. Firms must remain vigilant in monitoring and detecting potential misconduct, especially as technology evolves and introduces new avenues for unauthorized activities.

Electronic Signature Misuse

According to the FINRA order, Thrivent representatives “were able to electronically sign documents and to obtain electronic signatures from customers remotely, by emailing customers a link to documents that the customers could electronically sign.” This remote signing process raised concerns about the potential misuse of electronic signatures.

• Thrivent would receive a certificate of completion identifying the email addresses, cell phone numbers, and IP addresses associated with the electronic signatures.

• However, the firm’s written supervisory procedures (WSPs) did not provide adequate guidance on identifying potential forgeries or falsifications.

• As a result, instances where representatives sent documents to their own email addresses or used their own phone numbers for authentication codes were not properly investigated.

The lack of oversight and clear guidance on electronic signature usage created an environment where representatives could potentially engage in unauthorized activities without detection.

Supervisory Shortcomings Identified

FINRA’s order highlighted several supervisory shortcomings at Thrivent Investment Management. The firm’s written supervisory procedures required representatives to obtain authentic customer signatures on firm documents. However, these procedures lacked any guidance on supervising the use of electronic signatures or assessing the genuineness of such signatures.

This lack of clear guidance hindered supervisors’ ability to effectively monitor and detect potential forgeries or falsifications. As a result, Thrivent was found to be in violation of FINRA Rule 3110, which mandates firms to establish and maintain a supervisory system to ensure compliance with securities laws and regulations.

Client Representation

FINRA clarified that the falsifications and forgeries were not carried out to facilitate unauthorized activities, and no customer harm or complaints were reported. While this is reassuring, the incident serves as a reminder of the importance of robust supervisory systems and safeguards to protect client interests.

As part of the disciplinary action, Thrivent agreed to a censure and to undertake remedial measures. These measures aim to address the identified deficiencies and strengthen the firm’s supervisory practices, particularly regarding electronic signatures and remote signing processes.

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