Dead Wrong: FINRA Fines Broker Over Undisclosed $1 Million Bequest

The Financial Industry Regulatory Authority announced that it has fined and suspended former Securities America and Osaic broker Kenneth John Malm for accepting a $1 million bequest from a deceased client without proper disclosure or approval from his firm.

According to FINRA, Malm was registered with Securities America Inc. until June 2024 and subsequently with Osaic Wealth Inc. before resigning in August 2024. His resignation came amid an internal review after it was discovered he had been named a beneficiary in a customer’s estate.

The customer, who was not an immediate family member, passed away in August 2021. Malm learned of the bequest after her death and ultimately accepted more than $1 million from the estate without notifying Securities America or obtaining the required written approval.

FINRA stated that this conduct violated FINRA Rule 3241, which prohibits registered individuals from accepting bequests from clients who are not immediate family members without firm authorization. Such behavior is also considered a breach of Rule 2010, which mandates high standards of commercial honor and just and equitable principles of trade.

Without admitting or denying the findings, Malm consented to a seven-month suspension and a $10,000 fine. The matter came to FINRA’s attention via a tip to its Securities Helpline for Seniors.

According to his BrokerCheck profile, Malm started his career with David Lerner Associates, a firm that FINRA recently ordered to pay more than $1 million in restitution.

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