According to FINRA, Feng Kou Chen was suspended from association with any FINRA member in all capacities for 20 months on October 8, 2024, and required to complete 20 hours of continuing education regarding discretionary trading within 60 days of his reassociation with a FINRA member firm. In light of Chen's financial status, no monetary sanction was imposed.

Chen falsified information on customer account forms by adding his own name as beneficiary to the accounts without the customers' knowledge or consent or his member firm's approval. In doing so, Chen falsely identified himself as a friend or relative of the customers on the required forms. Subsequently, the firm detected Chen's misconduct and removed him as beneficiary from the accounts.

Additionally, without the customers' prior authorization, Chen sold mutual funds in customer accounts totaling more than $1.9 million and purchased Unit Investment Trusts (UITs) for customer accounts totaling more than $1.7 million. This unauthorized trading involved substantial sums and represented a complete disregard for customer control over their own accounts.

Adding himself as beneficiary on customer accounts without the customers' knowledge is an extremely serious violation that suggests Chen was planning to financially benefit from customers' deaths. This is a form of elder abuse and financial exploitation that fortunately was detected before any customers died. The fact that Chen falsely identified himself as a friend or relative compounds the misconduct by involving additional false statements.

The unauthorized trading is equally serious. Trading nearly $1.9 million in mutual funds and purchasing nearly $1.7 million in UITs without customer authorization represents complete control over customer accounts without proper authorization. Customers have a fundamental right to control their own accounts and must authorize trades.

The fact that Chen's misconduct involved both fraudulent beneficiary designations and unauthorized trading suggests a pattern of treating customer accounts as if they were his own. This represents a fundamental breach of the trust that customers place in their broker.

The requirement that Chen complete 20 hours of continuing education on discretionary trading is intended to ensure he understands the rules and requirements for discretionary trading if he returns to the industry. However, given the serious nature of his violations, potential employers and customers should carefully consider whether to work with someone who has demonstrated such a fundamental disregard for customer rights and proper procedures.

For investors, this case illustrates the importance of regularly reviewing account statements and beneficiary designations. Customers should verify that beneficiary designations reflect their actual wishes and should question any changes they did not authorize. Similarly, customers should review trade confirmations and monthly statements to ensure all transactions were authorized.

Red flags that might indicate problems include: trades you don't remember authorizing, changes to beneficiary designations you didn't make, or a broker who discourages you from reviewing your account statements or asks you to sign blank forms.

The 20-month suspension from October 21, 2024, through June 20, 2026, is a substantial sanction that reflects the seriousness of Chen's violations. This case demonstrates that FINRA will impose lengthy suspensions for serious violations even when no fine is imposed due to the respondent's financial status.