Background
Tracy is a junior member of staff in the settlements team of a small regional stockbroker, where she has been employed for under a year, having joined straight from school. Although she feels reasonably confident that she can deal with most of the requirements of her job, she is a little nervous when her two colleagues suddenly are sick as the result of a virulent flu bug, leaving her as the sole member of the team apart from her supervisor Laura.
On Friday afternoon, Laura has to leave the office early to visit the dentist and as Tracy checks through the outstanding items late in the day, she is concerned to discover that a purchase instruction from Sir James Moat, one of the firm’s key clients, instructing the firm to buy 60,000 shares in Grey Bank at a price of 38p is due for settlement that day.
The market in Grey Bank shares is very volatile and they have nearly doubled in price since the client gave his instructions, and Tracy is very worried that failure to settle the transaction will cost the firm a lot of money if they have to re-buy the shares at the current market price.
Tracy decides to ring the bank which holds the firm’s client money account to see whether she can get them to act on her payment request over the phone and although she has a good relationship with the bank, they tell her that they will act only if they receive a fax in the next 15 minutes, and it must be signed by two authorised signatories of Tracy’s firm. Conscious of the time ticking away Tracy quickly prepares the fax instruction and in Laura’s absence looks for Ken, her office manager and one of the firm’s other managers to sign the fax. She successfully gets the signature of Peter, an investment manager, who is the only person that she can find but Ken has apparently left the office for a few minutes.
The Dilemma
Tracy is very worried as there are now only 10 minutes left, when she sees on Laura’s desk a signed fax instruction for a different transaction, but containing the necessary signatures. Quickly she photocopies the instruction, cuts off the signature section and sticks it on to her own fax. She then photocopies her fax and satisfied that once it has been transmitted and printed at the other end it will stand a quick scrutiny, she sends it off. Tracy follows up the fax with a phone call to the bank and is told that the instruction is fine, and they will make the payment.
On Monday, Tracy came in to work and Laura asked her how things went on Friday, expecting to be told that all was quiet in the office as it was Friday afternoon. Tracy told her about Sir James Moat’s Grey Bank settlement situation and the difficulty that she had in getting signatures, explaining how she had dealt with the matter, expecting to be congratulated for using her initiative. Instead, Laura reacted with a look of horror saying, “you’re telling me that you instructed our bank to make a payment using forged signatures?”
Tracy defended herself saying that she had obtained Peter’s signature, which was the only one available and, in any case, she had the client’s instructions and failure to complete the transaction not only would have cost the firm several thousand pounds, but also have made the firm look incompetent in the eyes of a valued client. She believed that what she had done was simply acting in the best interests of the firm. Besides which, she had spoken to the bank on Friday and they were happy that they had a valid instruction, so there was no problem with them and the only person who appeared concerned was Laura.
But Laura focused only on the fact that Tracy had forged a signature and said that she would report the matter immediately to Ken and see what he had to say about it, since this was very serious.
Options
Ken thinks about what happened and what might be the most appropriate response:
- He recognises the dilemma which Tracy faced and congratulates her on saving the day by her pragmatic response to a difficult situation.
- He recognises the dilemma which Tracy faced and accepts that she had to do something but is very concerned that she felt that what she was doing was acceptable. He tells her that under no circumstances should she repeat it.
- Ken is influenced by Laura’s views and says that, regardless of the circumstances, what Tracy did is entirely unacceptable. She should be subject to serious disciplinary proceedings, which might well result in dismissal.
- Ken feels that because of the circumstances, including Tracy’s inexperience and short time that she has been with the firm, it would be inappropriate to take any draconian action against her. She should be firmly reprimanded and cautioned against undertaking anything of a similar nature in future.
Clearly, Tracy found herself in an invidious position. She felt that whatever course of action she might take had serious ramifications and she made a choice. But did she have any other choices?
Where junior members of staff are involved, the most appropriate course of action when faced with a serious dilemma beyond their competence or delegated power must be to refer the matter to someone more senior. Taking responsibility upon oneself should never involve any action that is fraudulent, illegal or even questionable.
Verdict
One possible alternative course of action could have been to pass the problem on to Peter, the investment manager, who was an authorised signatory, leaving it to him to try to convince the bank to make the payment against his sole signature, or to determine an alternative solution. Whilst that might not have worked, it would have resolved Tracy’s dilemma in that she involved a more senior member of staff, who should have been better able to decide upon an appropriate course of action. However, it might not have resolved the problem for the firm.
However, faced with what has occurred, Ken’s approach should be to discuss the matter with Tracy, to go over her options at each stage and to advise her what she should have done. He must tell her that using the copied signatures in the way that she did is not acceptable and that in the circumstances he would have accepted her explanation had the transaction not been processed, since it was not her fault that it had been overlooked. It was not for Tracy to judge whether failure to process the payment might have cost the firm money.
Ken should also discuss with Laura how it was that the important payment came to light only after she had left the office, and tell her that she was as much at fault as Tracy.
Further reading