FINRA Limits Brokers' Ability to Serve as Beneficiaries

Rule 3241 becomes effective Feb. 15, 2021.

The rule creates a uniform, national standard to govern registered persons holding positions of trust, better protects investors and provides consistency across member firms' policies and procedures, FINRA said.

Under the rule, a registered person must decline:

(1) being named a beneficiary of a customer's estate or receiving a bequest from a customer's estate upon learning of such status unless the registered person provides written notice upon learning of such status and receives written approval from the member firm prior to being named a beneficiary of a customer's estate or receiving a bequest from a customer's estate; and

(2) being named as an executor or trustee or holding a power of attorney or similar position for or on behalf of a customer unless: upon learning of such status, the registered person provides written notice and receives written approval from the member firm prior to acting in such capacity or receiving any fees, assets or other benefit in relation to acting in such capacity; and the registered person does not derive financial gain from acting in such capacity other than from fees or other charges that are reasonable and customary for acting in such capacity.

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