A Rockland County financial adviser has been sanctioned for accepting a bequest of more than $1 million from a former client.
The Financial Industry Regulatory Authority suspended Kenneth John Malm on May 20 from participating in the securities industry for seven months and fined him $10,000. Malm, of Airmont, consented to the sanctions.
Malm registered with FINRA in 1994 and has worked as a general securities representative and an investment banking representative. He operates Malm Financial Services, and since 2020 he has represented Securities America Inc. and Osaic Wealth Inc.
FINRA says it began investigating Malm when it received a tip on its Helpline for Seniors. Malm had learned that a Securities America client who died in August 2021 had named him a beneficiary in her estate and he stood to inherit more than $1 million.
FINRA requires members to decline being named as a customer’s beneficiary or receiving bequests, unless the customer is an immediate family member or where the brokerage firm assesses the situation and approves the bequest.
Malm accepted the bequest, according to FINRA, even though the client was not a member of his immediate family and he had not notified Securities America or received approval to accept it.
Malm’s actions also violated a FINRA rule that requires members to observe high standards of commercial honor and just and equitable principles of trade.
Osaic, which had acquired Securities America, notified FINRA last year that Malm had been permitted to resign “during an internal review concerning his being named as beneficiary of a client’s estate.”
