Did You Hear The One About The Zombie Who Requested An IRA Distribution?

January 9, 2023

Indeed, death is certain. What is less certain on Wall Street is whether on a post-mortem basis the dead are capable of transferring their IRA accounts to living relatives. You'd sort of think that the answer to the question was "no;" however, as a recent FINRA regulatory settlement demonstrates, what we think is an obvious answer isn't always so. Life and death have ways of surprising us!

Case in Point

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, Kimberly E. Nuessmann submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Kimberly E. Nuessmann entered the industry in 1987; and from November 2011 to January 2022, she was registered with Securities America, Inc.

In the Matter of Kimberly E. Nuessmann, Respondent (FINRA AWC 2022073754401)

https://www.finra.org/sites/default/files/fda_documents/2022073754401

%20Kimberly%20Nuessmann%20CRD%201596560%20AWC%20gg.pdf

The Living Dead? Zombies?? She's Not There ???

The AWC asserts in part that:

In December 2021, Nuessmann submitted a distribution request to Securities America to transfer the proceeds of her deceased relative's IRA account to an account controlled by two of Nuessmann's other relatives (Relatives A and B). Securities America did not know the customer was deceased. Several days later, a firm employee called the customer to verify the distribution request. Nuessmann answered, impersonated the deceased customer and verified the request. The employee discovered that the customer was reported deceased and called the registered representative for the customer's account for further verification. Nuessmann, who worked with the registered representative, spoke with the employee and indicated that the customer was not deceased. Ultimately, Securities America determined that the customer was deceased and canceled the distribution.

By impersonating a former customer, Nuessmann violated FINRA Rule 2010.²
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Footnote 2: In February and March 2022, pursuant to proper instructions, the proceeds of the IRA account were transferred to the two relatives' account.

FINRA Sanctions

In accordance with the terms of AWC, FINRA imposed upon Nuessmann a $5,000 fine and 30-calendar-day suspension from associating with any FINRA member in all capacities.

Bill Singer's Comment

Omigod? Seriously?

Lemme see if I got this --

Neumann's relative with the IRA (the "IRA-Relative") died;
After the IRA-Relative's death, Neumann submitted an IRA distribution request to Securities America;
At the time when Neumann submitted the IRA distribution request, Securities America did not know of the IRA-Relative's death;
During the processing of the request, a Securities America Employee called the IRA-Relative to confirm the bona fides of the request;
Neumann answered the confirmation phone call by impersonating the now-deceased IRA-Relative and affirming that the distribution had been requested;
After making the confirmation call, the Securities America Employee discovered that the IRA-Relative was deceased; and, thereafter, that employee called the servicing representative to confirm the customer's death;
Neumann called the Securities America Employee and advised that the IRA-Relative was NOT deceased (as in, y'know, very much alive); and
Securities America determined that the Not-Dead-IRA-Relative was, in fact, a Dead-IRA-Relative; and, accordingly, the firm canceled the requested distribution because the firm probably concluded that the distribution was requested by a Living-Dead-IRA-Relative; and as anyone who has watched any zombie movie or television show knows, there is no zombie alive (or living-dead) who can dial a phone in order to make a phone call; and, even if they did, their fingers would likely fall off if they pressed a button to dial a phone number; and, more critically, once a subscriber is dead (or living-dead), cellphone carriers eventually remove them from any Family Plan because it's one of the restrictions for such accounts that they are void where prohibited or used by a zombie; of course, if the zombie could get a co-signer and provide a liability waiver, some carriers might continue coverage but I am unaware of such a exception having been made. Which prompts the question as to whether a zombie could use a cellphone to call for a pizza delivery despite the fact that the living-dead would not be able to articulate an intelligible order, probably lack cash to pay for the purchase, and no longer maintain the mental ability to give an address for delivery or calculate a tip.