FINRA Suspends Broker for Improper Use of Firm Funds
Commentary by Steven Lofchie
FINRA suspended a broker for charging personal expenses to firm accounts.
According to the AWC, the broker charged $4,463.49 in personal expenses to a firm credit card and a firm account at a car service provider in violation of the firm’s travel and business expense policy. FINRA found that the broker submitted expense reports falsely characterizing 15 charges as business expenses when they were personal in nature. FINRA stated that the expenses included hotel stays, meals, and transportation costs such as airfare, fuel, car service rides, and Uber ride shares associated with non-business trips. FINRA noted that after the firm questioned the expenses, the broker offered to reimburse the firm.
FINRA determined that the broker violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").
The broker consented to (i) a six-month suspension from associating with any FINRA member in all capacities and (ii) a $5,000 fine.
Commentary
As previously noted, the fines and other penalties that FINRA imposes on individual representatives seem completely disconnected from the actual harm done.
In this case, a representative is fined $5,000 and is subject to a six-month suspension for essentially stealing less than $5,000 from his employer, which is (not to excuse the crime) a big institution. A broker was recently fined $2,500 and subject to a four-month suspension for failing to report an outside business activity, with no report of damage to a third party.
But in instances of excessive trading where brokers essentially stole far greater amounts from retail customers, generally seniors, three brokers were fined (i) nothing, (ii) $10,000 and (iii) $5,000 and subject to suspensions of from three to six months. See FINRA Suspends Brokers for Excessive Trading (Aug. 25); FINRA Suspends Broker for Excessive Trading (Aug. 22).
Why is the penalty for stealing less than $5,000 from a sophisticated employer greater than the penalty for stealing far greater amounts from senior citizens?