An advisor who was allowed to resign from Osaic Wealth after inheriting over $1 million from a client has agreed to a suspension and fine to settle allegations by the Financial Industry Regulatory Authority, the agency announced this week.
Kenneth John Malm accepted a seven-month suspension and a $10,000 fine and, without admitting or denying them, accepted FINRA's findings that he violated its rules by accepting the bequest without having notified his firm in writing and receiving approval, FINRA said.
Malm was registered as a broker with Securities America Inc. from July 2020 until June 14 last year when, through a mass transfer after the firm rebranded, he became registered in those capacities through Osaic. On Aug. 22, Osaic filed a notice with FINRA stating that Malm was permitted to resign "during an internal review concerning his being named as beneficiary of a client's estate," the authority said.
The matter originated from a tip to the FINRA Securities Helpline for Seniors, which came after one of Malm's customers at Securities America died in August 2021, FINRA said.
"After the customer's death, Malm learned that he was named as a beneficiary of her estate and that he stood to inherit more than $1 million. The customer was not a member of Malm's immediate family. Malm did not notify Securities America of the bequest prior to accepting it, nor did he receive written approval from the firm to accept the bequest. Nonetheless, Malm accepted and received the bequest," the agency said in an acceptance, waiver and consent letter.
FINRA requires registered professionals to decline being named a beneficiary of a customer's estate or receiving a bequest from a customer's estate unless the customer is an immediate family member or the representative provides written notice to firm and obtains approval.
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