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Regulation and Compliance > Federal Regulation > FINRA

Wells Fargo Rep Made His Friend a Client’s Beneficiary: FINRA

By Jeff Berman

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What You Need to Know

  • FINRA alleged Mark Brewer submitted a form naming a family friend as the beneficiary of a client’s accounts.
  • FINRA Rule 3241 does not permit such an action, deeming it a potential conflict of interest.
  • The client removed Brewer’s friend as beneficiary of her accounts after Wells Fargo contacted her about the beneficiary designation.

The Financial Industry Regulatory Authority suspended a Wells Fargo broker from associating with any FINRA member in any capacity for 45 days and fined him $5,000 after asking a client to designate his friend as a beneficiary of the client’s accounts, in violation of FINRA Rules 3241 and 2010.

Without admitting or denying the findings of FINRA’s investigation, Mark Allen Brewer signed a FINRA letter of acceptance, waiver and consent on May 5, consenting to the regulator’s sanctions to end the dispute. Michael Newman, FINRA senior counsel, signed the letter on Friday.

The regulator’s investigation originated from a FINRA Rule 4530 report filed by Wells Fargo disclosing that Brewer submitted a form naming a family friend as the beneficiary of a client’s accounts.

Wells Fargo and Matthew C. Plant, an attorney with the law firm Lax Neville in New York, who represented Brewer, didn’t immediately respond to requests for comment on Monday.

Brewer first registered with FINRA in 1991. Since January 2008, he was registered as a general securities representative through an association with Wells Fargo Clearing Services, according to the regulator.

In response to a client’s request that Brewer be named as the beneficiary of her accounts at Wells Fargo, Brewer recommended the client instead name a friend of his. “Brewer did so after Wells Fargo had denied Brewer’s earlier request that he be approved to be the beneficiary of the accounts,” according to the consent letter.

The Violations

FINRA Rule 3241 provides that “[a] registered person shall decline being named a beneficiary of a customer’s estate or receiving a bequest from a customer’s estate upon learning of such status” unless: (a) the customer is an immediate family member, or (b) the representative provides written notice to the firm, and the firm (after performing a reasonable assessment of the request) approves the request.

Rule 3241.06 also states that a registered person instructing or asking a client to name another person to be a beneficiary of the client’s estate or to receive a bequest from the customer’s estate presents a similar conflict of interest concerns as the registered person being so named, according to FINRA.

Therefore, the rule doesn’t permit a registered person to instruct or ask a client to name another person, such as the registered person’s spouse or child, to be a beneficiary of the client’s estate or to receive a bequest from the client’s estate, FINRA pointed out.

A violation of FINRA Rule 3241 is also a violation of FINRA Rule 2010, which states that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade,” the regulator noted.

Since 2016, Brewer was the registered representative on two Wells Fargo accounts held by the client. After the client’s spouse passed away in March 2020, the client informed Brewer, who she considered a friend, that she wanted to designate him as a beneficiary for her Wells Fargo accounts, according to FINRA.

In April 2021, the client again asked if she could change her beneficiary designations to name Brewer as beneficiary of her accounts, which Brewer declined, FINRA said.

Instead, after discussing other options, Brewer suggested the client submit two applications changing the beneficiary designations of her accounts to an individual who was a family friend of Brewer but had no connection to or relationship with the client, according to FINRA.

The client agreed and Brewer submitted the requests to Wells Fargo. Brewer did not disclose to Wells Fargo that the individual the client named as beneficiary of her accounts was Brewer’s friend, FINRA said.

Wells Fargo approved the client’s beneficiary change requests. But the client removed Brewer’s friend as beneficiary of her Wells Fargo accounts after the company contacted her about the beneficiary designation, according to FINRA. 

(Photo: Adobe Stock)

Jeff Berman

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