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NEWSLETTERS & ALERTS
When an Elderly Customer Names Her Broker’s Family as Sole Beneficiaries
by Howard Haykin
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."
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.]