by Howard Haykin

Murray Monroe agreed to pay a $15K fine and to serve a 4-month suspension to settle FINRA charges that he failed to timely notify and obtain approval from his member firm after learning that a customer had named him as executor of her estate and granted him general power-of-attorney.

BACKGROUND.    Monroe, a resident of Claremont, CA, has 24 years’ experience with 3 firms. He was associated with Western International Securities from 2010 until 2017. Monroe held the Series 6 and Series 7 licenses until 10/13/17, when FINRA revoked them for failure to pay his $15K in fines. He had no prior disciplinary history.

FINRA FINDINGS.    In August 2015, Monroe became aware that he was named as executor in a customer’s will. However, he did not notify the firm of his appointment as executor or his expectation of compensation. Instead, the firm learned of his executor status on 10/21/15, when it began the process of closing that customer’s account on her death. At that time, Western International obtained a copy of the customer’s will and discovered that Monroe had been named executor.

In addition, from September 25, 2015 through October 21, 2015, Monroe failed to disclose to his employing firm that he had been granted general power of attorney to act on that customer’s behalf.

The value of the real property that comprised the estate was approximately $800,000, and the value of the brokerage account was approximately $480,000. As a result, based on California probate law, Monroe had a reasonable expectation to receive about $26,000 in compensation – nice, though not quite enough to retire on.

Western International’s WSPs state that an employee may not act as a fiduciary – e.g., a trustee or an executor – unless the fiduciary appointment is by a family member or the employee is granted prior approval by the firm for the appointment. Neither exception applied in this case.

FINRA Rule 3270 prohibits any registered person from being an employee, independent contractor, sole proprietor, officer, director or partner of another person, or being compensated, or having the reasonable expectation of compensation, from another person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the firm in the form specified by the firm and received approval from that firm.

FINANCIALISH TAKE AWAYS.    It’s not unusual for a broker to be sanctioned for having failed to report his or her power-of-attorney assignment or designation as executor of a customer’s estate. What’s confounding is FINRA’s revocation of Monroe’s licenses for failure to pay his fines – according to FINRA BrokerCheck.

• Especially since his suspension runs from 7/17/17 through 11/16/17; and,
• Most FINRA cases classify fines as “deferred” – meaning they’re payable after the term of the suspension. Monroe’s AWC does not make such a reference.
• Without further details, we’ll have to accept that information on face value.  

That said, it’s one more reason for everyone to watch the wording of any legal documents, include FINRA “Letters of Acceptance, Waiver and Consent” (AWCs).

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

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2015047426001.