FINRA Breach of Fiduciary Duty and Fraud Arbitration Attorney, Russell L. Forkey, Esq.

August, 2011:

Alan English Smith (CRD #2201854, Registered Principal, Los Altos, California) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Smith provided partial responses to FINRA requests for information and failed to provide requested documents. The findings stated that Smith engaged in outside business activity without providing prompt written notice to, and receiving written approval from, his member firm by serving as executor of a customer’s estate and as successor trustee to the customer’s trust. The findings also stated that Smith understood that he would receive compensation when he was required to perform the duties, and he did receive compensation for performing the duties of executor and trustee; his firm’s procedures required written notice of outside business activities, and the firm’s written approval, before a representative could engage in such activity. The findings also included that Smith never notified his firm that he had accepted the appointment to serve as the executor of the estate, and never received his firm’s written approval. FINRA found that the customer’s heirs filed a lawsuit against Smith, which resulted in a default judgment against him for $851,985.81; the judgment included compensation for various substantial diversions of funds from the customer’s accounts, her trust and her estate, including diversion of annuity funds from the customer’s grandchildren to Smith’s relatives by substituting his relatives as beneficiaries. (FINRA Case #2008014961701).