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Bad Brokers

When an Elderly Customer Names Her Broker’s Family as Sole Beneficiaries

August 24, 2020

by Howard Haykin



What is the proper punishment ... for a broker who assisted an elderly customer in preparing beneficiary change forms that named his wife and adult children as sole beneficiaries on 2 life insurance policies held by the customer?
That broker, formerly with Pruco Securities, was assessed a $5,000 fine and a 3-month suspension. Yet, I would have this broker barred from the industry. In my view, his integrity has forever been shattered.  



FACTS & CIRCUMSTANCES, ACCORDING TO FINRA.    In September and October 2018, the Pruco Securities broker assisted his elderly customer in preparing beneficiary change forms on her 2 life insurance policies. The combined death value of these policies was $350,000.


The customer initially offered to designate the broker as the beneficiary, but the broker declined, citing firm policies. Instead, he suggested that the customer name his wife and children as the beneficiaries. The broker then submitted the beneficiary forms without notifying Pruco that his family members were the designated beneficiaries.


In January 2019, Pruco discharged the broker for his “failure to meet minimum production requirements.” Shortly thereafter, the customer submitted a series of updated change forms, which replaced the former broker’s wife and children as beneficiaries. These actions apparently revealed to Pruco Securities the nature of the customer’s earlier beneficiary designations - which "violated Company policy."


Note to Financialish Readers:  FINRA does not provide detailed explanations for the following:
  • Who initiated the idea of changing the beneficiaries on these policies - the customer or the broker? 
  • Why did the customer initially offer to designate the broker as beneficiary?
  • Why did the customer decide to change the beneficiaries shortly after the broker was terminated?



[For further details, click on … FINRA Case #2019063560201.]