According to FINRA, Shahab Seyedshahab TagnaviDinani was fined $5,000, suspended for 45 days in all capacities, and ordered to pay disgorgement of $1,998.77 in commissions plus interest for placing unauthorized trades in a deceased customer's account.
TagnaviDinani served as registered representative for a customer who maintained a non-discretionary account at his member firm. The customer was the only person authorized to authorize transactions in the account. After the customer died in January 2021, TagnaviDinani learned of the death the following day. Between the customer's death and November 2021, TagnaviDinani placed unauthorized buy and sell orders in the account.
While TagnaviDinani discussed several of the trades with surviving family members of the deceased customer, those individuals did not have trading authorization over the account. Trading authority in a non-discretionary account terminates upon the account holder's death, and surviving family members do not automatically have authority to direct trading unless they have been properly appointed and documented as authorized parties for the estate.
TagnaviDinani received $1,998.77 in commissions from the unauthorized trades, which he has been ordered to disgorge with interest. This commission disgorgement is appropriate because TagnaviDinani should not profit from unauthorized trading activity.
This case illustrates important principles regarding account authority and trading authorization. When an account holder dies, registered representatives must follow proper estate procedures and cannot simply accept trading instructions from family members without proper documentation of their authority. Firms have specific procedures for handling deceased customer accounts, typically requiring death certificates, estate documentation, and proper authorization from executors or administrators before any transactions can occur.
Investors and their families should understand the importance of estate planning for investment accounts and should ensure proper beneficiary designations and estate documentation are in place. Family members dealing with a deceased relative's accounts should work through proper legal channels and provide appropriate documentation to the firm.
