A former advisor for Osaic Wealth agreed to disciplinary action under a settlement with the Financial Industry Regulatory Authority over rules violations, Financial Advisor reported.
The matter involves Kenneth John Malm of Suffern, New York, who accepted a $1 million bequest from a client according to FINRA’s letter of acceptance, waiver and consent. Without admitting or denying the findings, Malm agreed to a seven-month suspension and a $10,000 fine.
Malm was registered as a broker with Securities America Inc. from July 2020 until June 14 last year when he became registered in those capacities through Osaic after the firm changed its name. Osaic said Malm was allowed to resign after an internal review about “his being named as beneficiary of a client’s estate,” according to a Form U5 termination notice.
An investigation began following a tip to FINRA Securities Helpline for Seniors, after one of Malm’s customers at Securities America died in August 2021.
“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,” FINRA said.
Malm was found to be in violation of FINRA Rule 3241, which prohibits registered representatives from letting themselves be named beneficiary of a customer’s estate or receiving a bequest—unless the customer is an immediate family member or the rep has provided the firm with written notice and the firm approves it. He also violated Rule 2010, which requires members and their associates to conduct business with “high standards of commercial honor and just and equitable principles of trade.”
Malm started with David Lerner Associates in 1994 in Syosset, New York, and moved to UBS Wealth Americas predecessor PaineWebber before joining Securities America in 2002, according to his BrokerCheck record.
The attorneys at Hyman Cotter PC were formerly senior attorneys in the SEC’s Division of Enforcement. We have represented clients in regulatory matters while working at Morgan Stanley and in private practice at some of the world’s largest law firms. Therefore, we understand the complexities that come with being the subject of a regulatory inquiry, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a free consultation.
