Recently the SEC indicated that advisory firms should have policies and procedures in place to ensure that electronic signatures are not being exploited to perpetrate fraud that could harm advisory clients.
To that end there are various methods that can be employed to ensure that the person receiving the request for electronic signature is the intended recipient/signer. Among other things, the recipient can be required to authenticate their identity before reviewing/signing the document through various methods including
- the sending of a code via text to a mobile number that the sender already has on file prompting the recipient to enter the validation code to confirm its identity
- requiring the recipient to answer questions about the recipient’s identity/background to validate that the recipient is the intended signer.
Advisers should utilize only those electronic signature services that have a validation method, such as the above, to authenticate that the person signing the document is the intended recipient/signer.
