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NEWSLETTERS & ALERTS
Broker’s Wife Named Beneficiary of Customer’s Estate, and He Lost His License
by Howard Haykin
Steven Olejniczak, a registered rep, agreed to pay a $10K fine and serve a 6-month suspension to settle FINRA charges that he failed to disclose to his member firm that, among other things, an elderly firm customer had designated him and his wife as a beneficiaries of the customer’s firm account, and had named his wife as a beneficiary of the customer’s estate.
BACKGROUND. Olejniczak, a resident of Grimes, IA, entered the securities industry in January 2012 with Edward Jones. He remained with the firm until 5/12/16, when he was U5’d because he "failed to report to the Firm that he was named as a beneficiary of a non-related client's Transfer on Death account." According to his CRD records,Olejniczak is still employed by Edward Jones, though his registrations are no longer active.
FINRA FINDINGS. Edward Jones prohibited its registered reps ... from being named as a beneficiary by his or her own customer while continuing to service the customer's account. Yet, in February 2016, Olejniczak was designated as beneficiary of 90% of the assets in a firm brokerage account held by a 76-year-old Firm customer - Olejniczak was the registered rep assigned to service this account. Olejnizcak failed to notify the Firm's Compliance Service Department and continued to service this customer’s account.
Edward Jones required its registered reps ... to notify the Firm's Field 2 Supervision Department upon learning that a customer had named the registered rep’s family member as a beneficiary. In March 2016, the same customer replaced Olejniczak with Olejniczak's wife as the beneficiary of 90% of the assets in his brokerage account. In that same month, the customer also named Olejniczak's wife as a beneficiary of his estate in his Last Will and Testament. Again, Olejniczak failed to notify the Firm's Field Supervision Department.
Edward Jones prohibited its registered reps ... from acting “in a fiduciary capacity" for a customer, subject to exceptions which required the approval of the Firm's Field Supervision Department. The Firm's policies defined "fiduciary capacity" to include serving as an "attorney-in-fact." In March 2016, the same customer executed a document that gave Olejniczak medical power of attorney over the customer in the event that he became incapacitated. Olejniczak, once again, failed to notify the Firm or seek its approval to serve as the customer’s medical attorney-in-fact.
FINRA said Olejniczak’s failure to comply with Edward Jones’ pols and procedures was a violation of FINRA Rule 2010.
FINANCIALISH TAKE AWAYS. Steven Olejniczak and his wife are quite fortunate individuals, though I confess to not knowing the net worth of the 76-year old Edward Jones customer. And, the fact that the customer’s largess came just 4 years after Olejniczak entered the securities industry is all the more remarkable.
Yet, upon learning of the customer’s designations, Mr. Olejniczak chose to not disclose the designations to his employer, Edward Jones.
- Perhaps Olejniczak made that decision for fear that the firm might prohibit the designations. However, according to FINRA’s interpretation of the firm’s policies and procedures, the designations were not prohibited or illegal, but required certain changes or conditions on the part of the registered rep – e.g., Olejniczak would have to step down as broker of record for this customer.
- Perhaps Olejniczak made the decision for fear that the customer might cancel the designations if Olejniczak had to step down as broker of record on his account(s). However, Olejniczak might have explained to the customer that he had no choice but to step down. That explanation, along with a promise to forever monitor the customer’s brokerage account, should have been enough to "seal the deal."
Instead, Olejniczak's silence seems to indicate that he and his wife never thought through this matter. Had they done so, they might have "had their cake and eaten it too."
This case was reported in FINRA Disciplinary Actions for July 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016050107901.