Finra Suspends Ex-RBC Broker Who Stood to Inherit $4 Million from Customer
A 26-year industry veteran in Maryland has agreed to a one-year suspension from the brokerage industry and $10,000 fine after an anonymous letter tipped his former firm off to his undisclosed status as executor and beneficiary of a late client’s estate.
His actions violated Finra’s rule barring brokers from engaging in outside business activities without reporting it to their employers and also triggered a violation of Finra Rule 2010 requiring “high standards of commercial honor,” the industry self-regulator said.
Cleary, who now works at a Rockville, Maryland-based registered investment advisory firm CIC Wealth, also ran afoul of internal policies at RBC and UBS that are aimed at eliminating potential conflicts by preventing employees from serving as an executor for a non-family member without prior disclosure and approval from the firm, Finra said.
Cleary signed a letter of acceptance, waiver and consent with Finra without admitting or denying its findings. Cleary and his lawyer, Jeremy Bartell in Washington, D.C., did not return calls for this story.
Cleary joined UBS in 2011, leaving in 2019 for RBC. After Cleary’s nine-month stint at RBC, the firm filed in September 2019 a U5 termination form that said Cleary’s departure had been voluntary and based on “a difference in business philosophy” and failing to disclose the fiduciary relationship, according to his BrokerCheck record.
An RBC spokeswoman noted in an emailed statement that Cleary “was only employed with RBC Wealth Management for a short period of time – less than a year.”
“We are deeply committed to careful management of the wealth clients entrust to us,” the spokeswoman said. “As such, we have strong policies and procedures in place, and a strict Code of Conduct that all employees must abide by. On the rare occasion an employee violates these policies, we take swift action as we did in this particular case.”
The Virginia state agency regulating brokers had also previously imposed a $35,000 fine on Cleary for the same conduct, according to his BrokerCheck record and Finra.
According to Finra, a client described as “Customer A” executed a will in July 2017 naming Cleary as executor. The fact that he had “reasonable expectations” to be compensated under Washington, D.C. laws and as a residual beneficiary triggered the outside business activity and “high standards of commercial honor” violations, the regulator said.
After the client died in October 2018, Cleary probated the client’s estate, Finra said. Still, Cleary did not inform his employers of his role and filled out annual compliance questionnaires at UBS and RBC stating he was not named as a will executor for a non-family member. The enforcement letter did not say whether Cleary had ultimately received assets from the estate.
While at UBS, Cleary took steps “to conceal” his beneficiary status, contacting insurance companies to “delink” the client’s annuities accounts’ statements so the firm would not be informed when he terminated them after inheriting them, Finra said.
A UBS spokesperson declined to comment.
The Finra suspension affects Cleary’s brokerage registration, which he maintains though independent broker-dealer Purshe Kaplan Sterling Investments, but not his investment advisory registration, which is overseen by the Securities and Exchange Commission.