Jan 31 (Reuters) - The risk of being fined, or even thrown out of the securities business, should be enough motivation for advisers to follow the industry's most basic rules.

In reality, that is not always the case.

A review of recent disciplinary sanctions by the Financial Industry Regulatory Authority, Wall Street's watchdog, suggests that some brokers may be either brazen or clueless.

Some went so far as to engage in sneaky transactions without their brokerages knowing. One broker failed to disclose a felony plea to an employer when applying for the job. Another got into trouble for walking out of a licensing exam and trying to cheat by peeking at a study guide he had stashed in his car.

The alleged missteps can serve as a reminder of some of these top blunders that brokers should avoid:

• Borrowing money from customers. It may seem like just a loan, but borrowing from clients is a way of misappropriating their money. Still, this industrywide taboo continues to tempt some brokers.

On Jan. 20, FINRA barred a former broker from the securities industry an Ameriprise Financial Inc unit for borrowing $45,000 from a 102-year-old client and then ignoring the regulator's request to interview him about the incident, according to a document from the watchdog.

The broker, James Landon Yarbrough, worked for units of Ameriprise Financial Inc in Florida between 2008 and 2010, when he voluntarily resigned, according to regulatory filings. Ameriprise rules prohibited brokers from borrowing from customers, except those who were immediate family members or financial institutions. But in 2009, Yarbrough did so anyway, according to FINRA.

Efforts by Reuters to reach Yarbrough were not successful.

Desperation and shoddy supervision are among the reasons why advisers may run afoul of the rule, said Marc Dobin, a Jupiter, Florida, lawyer who advises brokers. Sometimes advisers also develop friendships with their clients, blurring the line between business and personal. But there is no exception in the rules for borrowing from clients who become friends, Dobin said.

• Selling away. Brokers who privately sell securities without first getting permission from their brokerage firms are looking for trouble. The practice, known as "selling away," can lead to fines and suspensions for brokers, and possible enforcement actions against their employers for poor supervision.

"Why do people do it? It's a perennial question," said Patrick Burns, a securities lawyer in Beverly Hills, California.

Some brokers may want to sell securities that their firms do not offer, he said. The practice can also be lucrative since brokers do not have to share the commissions with their firms, lawyers said.

Be warned: it can also be dicey. Former Edward Jones adviser Melissa Reppert agreed in early January to a five-month suspension from the securities industry and $25,000 fine for selling away, according to a FINRA settlement document.

Reppert, of California, was moving to another company in 2010 when she recommended that two customers invest in that company, which was unregistered and not publicly traded, according to FINRA.

She then facilitated their investments in the company she was joining by transferring funds from their Edward Jones accounts to the company, according to the settlement. There was just one problem: She was still employed by Edward Jones, which was not aware of the situation, according to FINRA.

Reppert, who did not admit to or deny FINRA's allegations, told Reuters that she could not afford to fight the case. She did not profit from the transaction, she said, and is starting over in a new field. An Edward Jones spokesman said the brokerage had cooperated fully with FINRA's investigation.

• Altering client signatures. Chasing down signatures from clients can be a hassle. Think before making it worse by trying to save time by pasting a photocopy of a client's signature onto a form, or using other tricks.

Michael J. Binstock, a former adviser for Thrivent Financial for Lutherans Inc's Thrivent Investment Management Inc unit, is contending with these types of allegations.

In a regulatory complaint dated Jan. 11, FINRA said Binstock asked customers between 2007 and 2009 to sign blank or incomplete forms so he could change them to use later. FINRA also said Binstock had used customers' photocopied signatures to conduct transactions without clients' knowledge.

Binstock intends to fight the allegations, he told Reuters in an email, saying he was executing customers' verbal commands and getting their work "processed in a timely manner." FINRA has not entered any findings of wrongdoing against him. No customers were harmed, he wrote.

A Thrivent spokesman said the company had begun an investigation as soon as it learned of the possible violations and that Binstock, of Minnesota, voluntarily resigned. He is now an adviser at another firm.

"We continue to fully cooperate with regulators and have worked with potentially affected members to rectify any impact from Mr. Binstock's misconduct," the spokesman said in an email.

Signature violations are often a product of "expediency," said George Brunelle, a New York-based securities lawyer. There's only one way to avoid them, he said: "Don't do it."

(Reporting by Suzanne Barlyn)

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