Ex-Osaic advisor fined over failure to declare $1M bequest

Ex-Osaic advisor fined over failure to declare $1M bequest
The New York-based advisor, formerly affiliated with Securities America, has also been suspended for failing to disclose his status as a beneficiary.
MAY 20, 2025

Finra has fined and suspended an ex-Osaic advisor after finding he violated the industry regulator's rules by failing to disclose a million-dollar bequest from a client.

Kenneth John Malm, a former general securities representative in New York, has agreed to a suspension and a fine after the Financial Industry Regulatory Authority found he accepted a more than $1 million bequest from a client without notifying his firm.

Malm had been registered with Finra since 1994 and was associated with Securities America from July 2020 until June 2024. Following a mass transfer, he became affiliated Osaic Wealth, where he remained until August 2024.

His BrokerCheck profile shows his career in the industry spanned three decades, including a past affiliation with UBS Painewebber from 1998 until 2002.

He faced two customer disputes, including one former UBS client claiming in 2003 that Malm "breached his fiduciary duties by misrepresenting the risks and nature of unsuitable investments" he made. The client claimed roughly $186,000 in damages, but ultimately received just under $50,000 as a settlement.

Finra's latest disciplinary action stems from Malm’s conduct following the death of a client in August 2021, which came to light via a tip to the Finra Securities Helpline for Seniors.

According to the settlement dated May 20, Malm learned after her passing that he had been named as a beneficiary in her estate. The client was not a member of his immediate family.

Despite that, Malm failed to inform or seek approval to receive the inheritance from his then-employer, Securities America – which was later absorbed into Osaic as part of a broader consolidation strategy – as required by Finra Rule 3241.

The rule prohibits representatives from receiving bequests from clients who are not family members unless they provide prior written notice and obtain firm approval following a reasonable assessment.

Finra determined that Malm’s actions also violated Rule 2010, which requires members to observe “high standards of commercial honor and just and equitable principles of trade.”

Osaic reported that Malm was permitted to resign amid an internal review “concerning his being named as beneficiary of a client’s estate."

He has agreed to a seven-month suspension from associating with any Finra member firm, as well as a $10,000 fine.

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.