Silver Law Group Comments On Proposed FINRA Rule

FINRA requested comments on its proposed rule to limit registered representatives from being “named as a customer’s beneficiary or holding a position of trust for or on behalf of a customer.” Silver Law Group, a nationally-recognized investor rights law firm, has submitted a comment letter to FINRA that states our support for addressing this issue. Submitted by managing partner, Scott Silver, Esq., he comments that our firm has seen a rise in cases involving stockbrokers who improperly borrow money from clients, pressure clients to make the financial advisor part of the estate, and other trust and estate issues.

Financial Professionals And Their Customers

Brokers, financial advisors, and other investment professionals can sometimes become so close with their customers that they are named as the customer’s executor or trustee, beneficiary, or hold power of attorney. Holding such a position of trust can be a conflict of interest.

FINRA’s proposed new rule (Rule 3241) would “limit any associated person of a member firm who is registered with FINRA (each a “registered person”) from being named a beneficiary, executor or trustee, or to have a power of attorney or similar position of trust for or on behalf of a customer.”

FINRA (the Financial Industry Regulatory Authority) says that its proposed rule would protect investors by reducing the potential for financial exploitation. If enacted, the rule would require all FINRA-member firms to review and approve the written request of a registered person asking to be named a beneficiary or hold a position of trust for a customer, unless they are a member of the customer’s immediate family.

Stockbroker Misconduct

Our comment letter notes that change is needed. Elder financial abuse is a growing problem. As the country’s population ages, wealth is being transferred to younger generations in unprecedented amounts. Opportunities for brokers to commit elder financial fraud abound.

FINRA’s own reports on disciplinary actions show many examples of brokers or financial advisors borrowing money from clients, selling away to seniors, or asking to be made a beneficiary or trustee.

Our letter tells the story of an elderly and woman we recently represented. To protect her privacy, we refer to her as “Flossie”. In poor health, a court ordered guardian was appointed to help Flossie with her affairs. The guardian found that her financial advisor had “coordinated with a lawyer to re-write Flossie’s will making the financial advisor the beneficiary of her estate to the exclusion of Flossie’s own son. Moreover, the financial advisor had already taken control of Flossie’s checking account and was using her money for his personal expenses.”

Fortunately, we were able to work with the guardian to reverse the estate documents and recover damages. Many victims of this type of fraud are not so lucky. Families may discover that an investment professional has become a beneficiary of their elderly relative’s estate only after it has happened.

Are You A Victim Of Elder Financial Fraud?

If you or a member of your family has been a victim of elder financial abuse, please contact the Silver Law Group toll free at (800)-975-4345 or e-mail ssilver@silverlaw.com for a confidential consultation. Our attorneys have extensive experience representing investors in elder financial fraud cases and represent investors in Florida and nationwide. Our attorneys frequently work with trust and estate or probate lawyers on matters relating to stock or investment fraud issues.