The allegation was factually impossible and clearly erroneous, as the individual requesting the liquidation of investments and transfer of accounts was not a "customer" and the Claimant followed the actual customer's instructions. The actual customer was the individual's recently deceased mother who had set up her accounts as "transfer on death" accounts. The customer's designated legal representative was handling her estate, including the accounts at issue. The individual requesting the liquidation was one of several beneficiaries named by the customer. This individual presented himself at Merrill Lynch offices about eleven days after his mother's passing, to receive immediately the account funds to which he was entitled. He was disappointed to learn that the process for the "transfer on death" accounts was complicated and would take an extended time to complete. The Panel concluded that someone at Respondent's corporate office, in error, had taken this individual's expression of disappointment in the lengthy process as a complaint against the Claimant, and reported it as such. With the exception of this "complaint" the Claimant had an unblemished record in over thirty years of service.Bill Singer's Comment Corporate Office Error I loved how the FINRA Arbitration Panel put it: The Panel concluded that someone at Respondent's corporate office, in error, had taken this individual's expression of disappointment in the lengthy process as a complaint against the Claimant, and reported it as such. As I have often admonished, not all customer communications are necessarily "complaints;" and, not all complaints pertaining to customer accounts are prepared and sent by the customer. How communications are interpreted concerning the content of the message and the status of the sender can makes all the difference when it comes to compliance and regulatory issues on Wall Street. READ: "That Customer Complaint May Not Be A FINRA Reportable Event"(BrokeAndBroker.com Blog, December 4, 2015) BrokerCheck History Claimant Carr's online FINRA BrokerCheck records as of December 14, 2015, disclose under the heading: Customer Dispute- Closed-No Action/Withdrawn/Dismissed/Denied the following submission from Merrill Lynch based upon allegations contained in a written complaint purportedly received by the firm on February 13, 2015:
THE CUSTOMER ALLEGES HIS INSTRUCTIONS WERE NOT FOLLOWED FROM JANUARY 2014 TO FEBRUARY 2014 REGARDING THE LIQUIDATION OF INVESTMENTS AND TRANSFER OF ACCOUNTS AFTER THE DEATH OF THE ACCOUNT OWNER.Following Respondent Merrill Lynch's denial of the complaint on May 1, 2014, Claimant Carr offered this statement as reflected on BrokerCheck:
THE CLAIM HAS BEEN DENIED AND IS BELIEVED TO BE WITHOUT MERIT. WHEN THE APPROPRIATE DISTRIBUTIONS WERE MADE, THE FIRM PROPERLY FOLLOWED INSTRUCTIONS TO SELL THE SECURITIES. THIS SITUATION RESULTED IN A PROFIT TO THE CLIENT.
Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your "TOD beneficiary") upon your death without having to go through probate. By setting up your account or having your securities registered this way, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated. However, TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent. State law, rather than federal law, governs the way securities may be registered in the names of their owners. Most states have adopted the Uniform TOD Security Registration Act, although some have modified it. In addition, brokerage firms may decide whether or not to offer TOD registration. For more information about TOD registration, please visit the website of the National Conference of Commissioners on Uniform State Laws. There you'll find a summary of the Act, explaining how TOD registration differs from joint ownership. You'll also find a list of the states that have adopted the Act and the full text of the Act.The Nation Conference of Commissioners on Uniform State Laws website offers further guidance under its "TOD Security Registration Act Summary":
Y'know, all of this cheery holiday season blogging put me in mind of this uplifting Christmas song:
The Uniform TOD Security Registration Act is a late-1989 product of the National Conference of Commissioners on Uniform State Laws. The proposed statute is wholly enabling; it forces nothing on anyone. It is addressed to financial intermediaries, such as mutual funds, banks and brokers maintaining securities accounts for customers, and other organizations responsible for registries showing investment ownerships. The statute encourages and protects intermediaries who decide to offer a security or account registration form showing the owner's name and another designated as the owner's choice to become owner at the owner's death. A registration under the act might say: "owner; John Q. Investor; TOD beneficiary, Martha G. Investor" or more simply, just "John Q. Investor TOD Martha G. Investor." The letters T.O.D. stand for "transfer on death" signaling that the investment or account is to be re-registered on request after the owner's death in the name of the beneficiary.
Control of an investment registered in TOD beneficiary form, including the right to change or cancel the death beneficiary, lies solely with the owner and may be exercised via use of the intermediary's standard procedures for new registrations.
As is so with securities registered in two names with right of survivorship, the transfer of ownership at an owner's death to a survivor designated in the title form results from the registration form and occurs outside the probate process and without reference to any will. Proof of death and survivorship necessary to effect a re-registration or liquidation after the owner's death will be handled as survivorship claims of surviving joint tenants are handled today; i.e., by submission of a death certificate and an application for liquidation or re-registration in the beneficiary's name.
The statute proposes nothing that is novel or untested. Beneficiary form registrations of U.S. Savings Bonds have been available under federal law for more than half a century. Bank accounts and c.d.'s in an owner's sole name and payable on death to a named beneficiary are available in a number of states under p.o.d. account rules found in many banking codes. Life insurance and retirement benefit accounts by-pass probate en route to death beneficiaries designated in controlling paperwork. Mutual funds have occasionally offered a trust form registration that, like bank accounts in the name of one as trustee for another, achieve the results of a TOD registration by use of language that is much less understandable as to its purpose.
The statute enables avoidance of probate without the risk of problems caused by joint and survivor security titles that are especially hard on the elderly. A person, typically elderly and worried about the impact of high probate costs on family survivors, decides to add the name of a child to her own to create a joint tenancy with right of survivorship on a security or account title. The sole purpose is probate avoidance. The elderly originator of the joint holding probably does not realize that the one named co-owner now appears to own half of the asset meaning that the investment can't be cashed out or re-registered without the consent of both owners. The bad news may come when a child's creditors or divorcing spouse lays claim to the child's half. In short, to get the benefit of probate avoidance through co-ownership and survivorship, an elderly owner has to subject money set aside for future needs to the whims and claims of others, including possible strangers to the family. TOD security registration merely permits realization of the probate avoidance benefits of a joint registration but avoids the loss of sole control for the owner. In time, the TOD registration form should replace joint and survivor titling of investments.This simple bill is very important for it responds directly and efficiently to serious problems having a unique impact on the elderly that attend joint and survivor titling of investments. It also sanctions a title form that would enable probate-avoiding transfers at death in favor of any death beneficiary, possibly including recognized charitable organizations or a trust company that could not be listed as a co-owner with survivorship under conventional joint tenancy rules. It entails no unwanted costs for anyone, meets a strong need of the elderly, and is without downside risks to any but those very few who continue to feed on assets passing through probate.