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Regulatory Sanctions

Broker Quit Rather Than Return Inheritance from Customer’s Estate

October 23, 2018

by Howard Haykin


I get the need for firms to prohibit their employees from receiving or inheriting money from any customer – CONFLICTS OF INTEREST - real or implied. However, I’d like to think that exceptions can be made – as with instances where the associated person can establish (beyond a doubt) that he or she was named a beneficiary without any untoward action, such as pressure on the client.


In or around September 2016, a broker with Ameriprise learned that one of his customers had died and designated him as the beneficiary of approximately 10% of her estate. The broker entered the securities industry in 2003 and had only been serving as a registered broker for 4 years. [So, I'm guessing that his book of business was not all that large.] The broker did not notify the Firm or seek revocation of the bequest.


Seventeen months later, in or around February 2018, the broker received a $96,662 distribution from the customer’s estate. After depositing the money into his personal bank account, the broker informs Ameriprise of the distribution.


The firm ordered the broker to return the distribution from the customer, but he refused – and opted to resign from the Firm. Ameriprise U5’d the broker on March 5, 2018. Shortly eafter, FINRA hit the broker with a $5K fine and 3-month suspension on charges he violated FINRA Rule 2010.


An associated person violates FINRA Rule 2010 when he or she fails to comply with the policies and procedures of a FINRA regulated broker-dealer – i.e., his/her member firm - governing beneficiary designations by customers.



This case was reported in FINRA Disciplinary Actions for September 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2018057966901.