by Howard Haykin

Two brokers with Piper Jaffray – no doubt BFF’s – concurrently agreed to settle FINRA charges that they each had submitted and collected on falsified expense reports – conduct that would violate FINRA Rule 2010.

Both were U5’d (in September 2016) after the firm identified "a pattern of non-compliance … as it relates to classification of certain expenses as business expenses and accurately and completely identifying attendees at and venues of business-related entertainment."

BROKER ONE:  $5K FINE AND 9-MONTH SUSPENSION.    From January 2014 to September 2016, this broker submitted 16 business expense reimbursement requests (“expense reports”) totaling $5,300 that were based on inaccurate information. Broker One used his Firm-issued corporate credit card to charge several meals or events with his coworkers and, even though no clients were present, he characterized the expenses as meals or events with clients.  [FINRA AWC #2016051449201]

BROKER TWO:  $5K FINE AND 1-YEAR SUSPENSION.    During the same Relevant Period (January 2014 to September 2016), this broker submitted 23 expense reports totaling $16,000 that were based on inaccurate information. Broker Two also used his Firm-issued corporate credit card for several meals or events with coworkers. And, even though no clients were present, he too characterized the expenses as meals or events with clients.  [FINRA Case #2016051449001]

PARALLEL LIVES AND CAREERS.    It’s not surprising that these 2 brokers allegedly committed similar violations,were U5'd at the same time, and agreed to settle at the same time. A quick review of their backgrounds would indicate that they live parallel personal and professional lives.

• They reside in neighboring communities in Ohio – Broker One in Fairview Park, Broker Two in Westlake.
• Both joined Piper Jaffray in March 2012, and both started to ‘fudge’ their expense reports in January 2014.
• They have similar financial services careers –Broker One had 16 years’ experience, while Broker Two had 15 years.
• Both worked at Fifth Third Securities and NatCity Investments prior to joining Piper Jaffray.
• Finally, since being U5’d in September 2016, neither has been associated with another broker-dealer.
• One difference, though, is that Broker Two got 3 more months of suspension – apparently in deference to the additional $10,000 in falsified expenses that he submitted in the 7 extra expense reports.

These cases were reported in FINRA Disciplinary Actions for November 2018.

For details on either case, go to ...  FINRA Disciplinary Actions Online, and refer to the Respective Case Number.