FINRA warned firms to scrutinize broker requests "to be named a customer's beneficiary, executor or trustee or to hold a power of attorney for a customer."
In a statement, Head of FINRA Enforcement Jessica Hopper emphasized potential risks from these arrangements ranging from conflicts of interest to opportunities for "massive" financial exploitation. She referenced a recent rule proposal that would restrict certain associated persons from acting as beneficiaries, executors, or trustees on behalf of, or for, a customer under FINRA Rule 3241 ("Registered Person Being Named a Customer's Beneficiary or Holding a Position of Trust for a Customer") (see previous coverage).
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