An irreverent Wall Street Blog
An Elderly Grandma and Sister Who Wasn't and the New VA Beneficiaries
February 18, 2021
The two reps said that the elderly customer in assisted living was their grandma or sister. She wasn't. They helped her change the beneficiaries on her variable annuity. Go figure -- the two helpful reps wound up as beneficiaries. Of course, I wouldn't be telling you all of this unless something went amiss. Thankfully, something did.
Feng AWC
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Jenny Xinfang Feng submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jenny Xinfang Feng, Respondent (FINRA AWC 2018058750801)
https://www.finra.org/sites/default/files/fda_documents/2018058750801
%20Jenny%20Xinfang%20Feng%20CRD%206312900%20AWC%20sl.pdf
The AWC alleges that Jenny Xinfang Feng was first registered in 2014 with Transamerica Financial Advisors, Inc. The AWC asserts that Feng "does not have any relevant disciplinary history." The Feng AWC alleges in part that:
The AWC alleges that Jenny Xinfang Feng was first registered in 2014 with Transamerica Financial Advisors, Inc. The AWC asserts that Feng "does not have any relevant disciplinary history." The Feng AWC alleges in part that:
In May 2007 DC purchased a variable annuity through another FINRA member and designated her family members as beneficiaries. In January 2013, she opened an account at Transamerica with Feng's colleague WL, also a Transamerica registered representative who worked with Feng. DC was not related to Feng or WL.
In April 2017, Feng and WL assisted DC in changing the beneficiaries on the annuity. DC was then a vulnerable 87-year widow, who was living by herself in an assisted living facility. During a call with the annuity company on April 18, 2017, Feng with WL present claimed that she was calling for "grandma," and requested that a change of beneficiary form to be sent to Feng's personal email address. Neither Feng nor WL identified themselves as registered representatives associated with Transamerica.
On May 1, 2017, Feng and WL assisted DC in completing a beneficiary change form, which was then sent from DC's residential facility. The form listed four primary beneficiaries with equal 25% shares, two of whom were Feng, and WL. The beneficiary change form falsely represented to the annuity company that Feng's "relationship to owner" was "granddaughter" and WL's "relationship to owner" was "sister."
On May 2, 2017, Feng participated in a follow-up call with the annuity company to confirm receipt of the beneficiary change form. During the call, Feng again falsely represented that she was DC's granddaughter. Once again, neither Feng nor WL identified themselves as registered representatives associated with Transamerica. On the same day, the annuity company confirmed the beneficiary change.
In May 2018, DC's family members discovered that Feng and WL were designated as DC's beneficiaries and the designations were changed to remove Feng and WL.1
Feng never disclosed to Transamerica that she was a named beneficiary on DC's variable annuity, including after DC's family members complained to the firm. Moreover, during an internal review, in February 2019, Feng denied being a beneficiary of DC's accounts or policies in response to an email from the firm. In August 2020, she continued to deny being DC's beneficiary in response to email inquiries about her beneficiary status and during an interview with firm compliance personnel.
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Footnote 1: When DC died in April, 2019, neither Feng nor WL benefitted financially.
Liang AWC
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Wenru Liang submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Wenru Liang, Respondent (FINRA AWC 2018058750802)
https://www.finra.org/sites/default/files/fda_documents/2018058750802
%20Wenru%20Liang%20CRD%205157279%20AWC%20sl.pdf
%20Wenru%20Liang%20CRD%205157279%20AWC%20sl.pdf
The AWC alleges that Wenru Liang was first registered in 2008 and by 2012, she was registered in 2012 with Transamerica Financial Advisors, Inc. The AWC asserts that Liang "does not have any relevant disciplinary history." The Liang AWC alleges in part that:
In May 2007, DC purchased a variable annuity through another FINRA member and designated her family members as beneficiaries. In January 2013, she opened an account at Transamerica with Liang. DC was not related to Liang or Liang's colleague JF.
In April 2017, Liang and JF assisted DC in changing the beneficiaries on the annuity. DC was then a vulnerable 87-year widow, who was living by herself in an assisted living facility. During a call with the annuity company on April 18, 2017, JF with Liang present claimed that she was calling for "grandma" and requested that a change of beneficiary form to be sent to JF's personal email address. Neither Liang nor JF identified themselves as registered representatives associated with Transamerica.
On May 1, 2017, Liang and JF assisted DC in completing a beneficiary change form, which was then sent from DC's residential facility. The form listed four primary beneficiaries with equal 25% shares, two of whom were JF, and Liang. The beneficiary change form falsely represented to the annuity company that Liang's "relationship to owner" was "sister," and JF's "relationship to owner" was "granddaughter."
On May 2, 2017, Liang participated in a follow-up call with the annuity company to confirm receipt of the beneficiary change form. During that call, JF again falsely represented that she was DC's granddaughter. Once again, neither Liang nor JF identified themselves as registered representatives associated with Transamerica, nor did Liang correct JF's misstatement that DC was her grandmother. On the same day, the annuity company confirmed the beneficiary change.
In May 2018, DC's family members discovered that Liang and JF were designated as DC's beneficiaries and the designations were changed to remove Liang and JF. 1
Liang never disclosed to Transamerica that she was a named beneficiary on DC's variable annuity, including after DC's family members complained to the firm. Moreover, during an internal review, in February 2019, Liang denied being a beneficiary of DC's accounts or policies in response to an email from the firm. In August 2020, she continued to deny being DC's beneficiary during an interview with firm compliance personnel.
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Footnote 1: When DC died in April, 2019, neither Liang nor JF benefitted financially.
FINRA Sanction
In accordance with the terms of the AWC, FINRA found that Feng and Liang had each violated FINRA Rule 2010, and the self regulator imposed upon each Respondent a $7,500 fine and a six-month suspension from associating with any FINRA member in any capacity
Bill Singer's Comment
Not a whole lot off difference between the Feng AWC and the Liang AWC:
- In May 2007, DC purchased a VA and she designated family members as beneficiaries.
- In 2013, DC opened a new account with Liang at Transamerica -- why this new account was opened and whether Feng, Liang, and DC had some prior social interactions is not set forth in the AWCs.
- In April 2017, DC, who is now an 87-year-old widow in an assisted living facility, changes the beneficiaries on her VA from 100% family to four 25% shares among which two shares went to Feng and Liang, and the other two seem to have remained with the previous family members, or not (the AWCs fail to clarify where the remaining 50% went). The AWCs allege that Feng and Liang "assisted DC in changing the beneficiaries." Despite having no family relationship to DC, Feng listed herself on the beneficiary change form as a "granddaughter" and Liang as a "sister." Oh, how thoughtful!
- In May 2018, DC's family members discovered the beneficiary changes and removed Feng and Liang. In apparent response to questions from Transamerica about the DC beneficiary event, Feng and Liang denied being named as beneficiaries.
- By the time of DC's death in April 2019, the AWC allege that neither Feng nor JF realized any financial benefits from the whole VA fiasco.
In light of what I personally find to be horrific facts, I am unable to reconcile FINRA's allegations with what strikes me as an absurdly tepid sanction of $7,500 and six months of suspension. Just what does a registered rep have to do in order to be barred by FINRA? Six months of suspension on these facts? That's it?
The only way that the light suspensions make sense is if it turns out that FINRA dug deep into its hoard of hyperbole and spun a tale that is far worse than the underlying facts. On the other hand, if the fact pattern published in each AWC is accurate, we got an elderly woman in assisted living who seems to have been victimized by two reps who conspired to change the beneficiaries on her VA -- and if the latter version of events is indeed correct, how does all of that only amount to a few months on the sidelines?