The Financial Industry Regulatory Authority has penalized a former Wells Fargo Clearing Services representative for allegedly making misleading statements about her role as trustee of a foundation funded with assets from a customer’s estate, according to Advisor Hub.
FINRA fined Carol L. Abdo-Brownsberger fined $5,000 and suspended her for six months. She did not admit or deny the allegations but accepted FINRA’s findings.
Abdo-Brownsberger was with Wells Fargo from 2008 until 2023, when the firm filed a Form U5 terminating her registration “after allegations she failed to obtain approval prior to opening and directing investments in an outside account and receiving a portion of a deceased client[’]s assets.”
In a letter of acceptance, waiver and consent, FINRA detailed the allegations against Abdo-Brownsberger, saying that she provided inaccurate information to her firm when seeking approval to serve as the trustee of a private foundation funded with about $675,000 in assets from a customer’s estate, in violation of FINRA Rules 3210 and 2010.
Rule 3210 requires all employees to obtain their firm’s prior written consent to open or maintain an account at another broker-dealer or financial institution where securities transactions can occur and in which the employee has a beneficial interest.
Rule 2010 requires members to observe high standards of commercial honor and just and equitable principles of trade in connection with their business. Providing false information to a FINRA member firm is a violation of FINRA Rule 2010.
According to FINRA, Wells Fargo’s supervisory procedures prohibited its representatives from accepting bequests or designations as a beneficiary from non-family members unless approved by the firm based on the facts and circumstances of the request.
In this case, it was determined that one of Abdo-Brownsberger’s customers named beneficiaries for her Wells Fargo accounts that included a charity belonging to a third party with whom Abdo-Brownsberger was acquainted. In May 2021, the customer passed away and two years later, Abdo-Brownsberger established a foundation with herself as trustee.
“In February 2023, Abdo-Brownsberger’s acquaintance voluntarily transferred approximately $675,000 of the customer’s bequest to fund a foundation that Abdo-Brownsberger had recently established”, according to the letter of settlement. “While seeking Wells Fargo’s approval to serve as trustee, Abdo-Brownsberger made inaccurate statements about her responsibilities as trustee and whether her request to serve as trustee arose out of a Wells Fargo customer relationship. First, Abdo-Brownsberger certified to Wells Fargo that she would not have “direct or indirect control over the investment decisions” for the foundation.”
In addition, FINRA said Abdo-Brownsberger opened a brokerage account at another FINRA member for the foundation in which she had control over investment decisions and made investment decisions on the foundation’s behalf. The authority states that Abdo Brownsberger certified to Wells Fargo that her role as trustee did not “arise out of a Wells Fargo customer or third-party service provider relationship.” In fact, it was determined that Abdo Brownsberger used the foundation to receive money left by a Wells Fargo customer.
Abdo-Brownsberger also falsely represented in a 2022 attestation and a 2022 compliance questionnaire that she had no undisclosed outside brokerage accounts, FINRA said.
FINRA did not accuse Abdo-Brownsberger of violating rules requiring brokers to obtain approvals before serving as the beneficiary of a customer’s estate, and it did not specify what happened to the money that had been directed to the foundation.
Abdo-Brownsberger could not be reached for comment and did not have a lawyer listed in the settlement. A Wells spokesperson declined to comment.
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