By Howard Haykin

Abed Darwish agreed to a $7.5K fine and an 18-month suspension to settle FINRA charges that, among other things, he used the personal identification information of 2 customers of a bank affiliated with his member firm, without their knowledge and consent.

BACKGROUND. Darwish, a resident of North Ridgeville, OH, has 8 years’ experience with 2 firms – AXA Advisors and Key Investment Services (KIS). He holds these licenses: Series 7; Series 24; and Series 66.  Darwish remained with KIS from 2010 to 2015, and currently is not associated with a FINRA-regulated broker-dealer. He had no relevant disciplinary history.

FINRA FINDINGS.    Darwish was cited for 3 violative actions in this case:

• Used Customers' Personal Identification Information.   

In March 2013, Darwish visited the investor website of a 3rd-party broker-dealer and, using the personal identification information of 2 bank customers (“JC” and “BC”), established online access for the joint brokerage account the couple held at the 3rd party B/D. Darwish used the account information he obtained to prepare alternate investment recommendations for JC and BC so that he might convince them to transfer their brokerage account to KIS. As a registered rep of KIS, Darwish had access to JC and BC's personal banking information; however, neither JC nor BC authorized Darwish to establish online access for their 3rd-party brokerage account.

• Added His Wife as Beneficiary to a Customer's Variable Annuity Contract and Later Made False Statements to the Firm

In January 2015, Darwish had a customer (“IS”) sign an incomplete change of beneficiary form for her variable annuity (V/A). Thereafter, without IS's knowledge and/or authorization, Darwish added his wife as a 50% primary beneficiary to IS's V/A. Some 10 days later, when customer IS received notification from the annuity company advising her of the addition of Darwish's wife as a beneficiary, IS immediately notified Darwish and requested that her husband be named as the sole beneficiary of the V/A. Darwish corrected customer IS's annuity beneficiary designations that day.

Shortly thereafter, the Firm received an anonymous complaint regarding Darwish's handling of IS's V/A contract. During the Firm's investigation into the errors on customer IS's change-of-beneficiary form, Darwish made false statements to the Firm as to the reason for, and events leading up to the submission of, the change of beneficiary for IS's V/A.

►  Among other things, he stated that the changes to IS's V/A were the result of his determining that IS had not designated any contingent beneficiaries.
►  That statement was false since, at the time of the proposed change, IS had already designated her husband's estate as the contingent beneficiary of her V/A.

• Caused KIS to Maintain False and Inaccurate Books and Records

This violative action related to the preceding situation where Darwish had his customer sign an incomplete V/A change-of-beneficiary form and then completed that form without her knowledge or consent.

FINANCIALISH TAKE AWAY.    This broker comes across as somewhat spooky – and I don’t mean in a Halloween 'ha-ha' way. In 2003, Darwish impersonated a peace officer - a misdemeanor – for which he was fined $250. Ten years later, he’s “impersonating” brokerage customers and using their personal ID information to access their account at another firm.

Question 1: Why wasn’t this (criminal?) action reported in 2013? There's no mention of this incident until 2 years later – in this AWC. Had action been taken at the time, this (dangerous) individual would have been sidelined, which would have prevented him from committing further violative actions.

Question 2: At the end of Darwish’s 18-month suspension, would FINRA seriously consider permitting this lying broker back into the business – even in an unregistered capacity? That shouldn't be allowed to happen. As it were, I would have endorsed barring Darwish from the industry.

This case was reported in FINRA Disciplinary Actions for August 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2015045720901.