Broker Settles FINRA Charges for Improper Expense Reimbursements
Commentary by Steven Lofchie
A broker settled FINRA charges for improperly expensing overtime meals without meeting the required criteria for reimbursement.
According to the AWC, the firm's policy allowed employees to charge meals only when working specific overtime hours and consuming the food on-site. FINRA found that the broker improperly charged approximately $6,000 for more than 175 meals. FINRA stated that the broker "circumvent[ed] controls" to have meals delivered to non-firm addresses or ordered them to the office on days she did not work to "create the appearance" of compliance.
FINRA concluded that the broker violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").
To settle the matter, the broker agreed to a nine-month suspension from associating with any FINRA member in all capacities.
Commentary
The suspension imposed on this broker, who allegedly stole a not-huge sum of money from his employer, is much greater than the penalties imposed on brokers who steal far greater sums from elderly customers or persons otherwise unable to protect themselves. FINRA should re-examine whether its penalties are proportionate to the sins for which penalties are imposed.
The contrast with a recent SEC settlement is notable. The SEC just imposed a six-month suspension (see below) — as compared to nine months in the FINRA case — on a CCO who allegedly stole ten times more money from customers. So, it is not just FINRA that is missing the proportionality here; it is securities regulators generally.