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Regulatory Sanctions

FINRA Suspends Broker Who Got Too Close to Customer

May 21, 2017

By Howard Haykin

 

The customer’s always right – except when it causes the broker to be in contravention of Firm Policies and FINRA Rules. In this case, one might hope that the broker’s inheritance makes up for his long suspension meted out by FINRA.

 

Danny Divver, a registered rep, agreed to $10K fine and a 9-month suspension to settle FINRA charges he engaged in outside business activities, including holding a power of attorney over a customer and being named executor of the customer’s will, without providing prior written notice to the firm.

 

BACKGROUND.    Danny Divver, residing in Laurel, MD, entered the securities industry in January 1985. He was associated with SagePoint Financial from October 2008 to April 2015, when the firm U5’d him for violating "Firm policy regarding being named as a beneficiary on a client account." He currently is not associated with a FINRA-regulated broker-dealer. Mr. Divver has no prior disciplinary history.

 

FINRA FINDINGS.    In or around 2005 or 2006, Divver was appointed as power of attorney (POA) and executor for a customer. In October 2014, Divver brought this customer, who was then 88 years old and a customer of both SagePoint and Divver, to her attorney, with whom Divver also had a personal and professional relationship, to update her estate plans. In November 2014, Divver learned that the customer had re-appointed him as POA and, in early 2015, also learned that the customer had re-appointed him as executor of her will.

 

In addition, sometime during the period, October 2014 and April 2015, Divver:

  • was appointed as the beneficiary on a Firm customer's variable annuity policy;
  • learned that his wife and children were the contingent beneficiaries;
  • became a joint owner with rights of survivorship on the customer's bank accounts; and,
  • learned that he was the primary beneficiary of her estate – supposedly after she passed away.

 

At no point in time, over an 11- or 12-year period, did Divver ever report these assignments to SagePoint Financial or any other firms with which he was associated. Failure to provide written notice of any outside business activity is in violation of FINRA Rule 3270. In addition, SagePoint’s WSPs regarding outside business activities prohibited its registered reps from accepting or acting in the capacity of a power of attorney, or acting as an executor, for any person who was not an immediate family member. The customer was not a member of Divver’s immediate family.

 

Furthermore, having been appointed beneficiary on his customer's annuity policy, having been made joint owner with rights of survivorship on the customer's bank accounts, and having been named beneficiary of the customer's will were all in violation of FINRA Rule 2010.

 

This case was reported in FINRA Disciplinary Actions for May 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2015044994801.