For the purpose of settling rule violations alleged by the Financial Industry Regulatory Authority ("FINRA") but without admitting or denying the findings, Kristen Jacques submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which the self-regulatory organization accepted. In the Matter of Kristen Jacques, Respondent (AWC/20100240777, September 14, 2011).
In October 2006, Jacques became employed at a New York City branch office of Goldman, Sachs & Co. ("Goldman Sachs" ) as a nonregistered back-office employee. According to the AWC, Goldman Sachs fired Jacques on July 12, 2010, for "using a Firm-issued credit card for personal expenses and signing her manager's name on forms related to those expenses." She had no prior disciplinary history.
The AWC alleged that from April 2009 through July 2010, Jacques used her Goldman Sachs corporate credit card for personal expenses, which she ultimately paid. The AWC stated that:
to avoid detection by the Firm, Respondent signed or stamped the signature of her supervisor onto 13 travel and entertainment reporting approval forms ("Expense Reports") and submitted them to the Firm.
Neither Goldman Sachs nor Jacques' supervisor gave her permission or authority to forge the signatures on the Expense Reports. Pointedly, above the attestation line for each "Authorized Approval Signature" was the statement that:
To the best of my knowledge, all statements on this report are true and factual and all expenses are in conformity with Firm policy. Except as specifically identified in this expense report, no expenses have been used for the entertainment (including meals) of, or gift given to any restricted recipients as defined in the firm's gifts and entertainment policy.
As to the thirteen Expense Reports, oddly, Jacques meticulously listed each expense as "personal." It is also important to reiterate that not only did Jacques not hide the personal nature of her charges, but she also attached a check to each Expense Report in order to reimburse Goldman Sachs for the personal charges.
FINRA determined that Jacques conduct, taken as a whole, amounted to the submission of falsified expense reports in violation of FINRA Rule 2010, for which the regulator imposed a Censure, $5,000 fine, and a 1 year suspension.
The nuance of these corporate charge cases is that many firms permit personal charges by employees provided that the expenses are timely listed as such and promptly reimbursed. For example, many employees may be required to pay for personal telephone calls (or personal calls over a set dollar amount) on a company-issued cellphone - and the protocol is that you typically circle such charges on your monthly bill and remit the expense to your firm. To that extent, some personal expenses on a corporate account are permitted.
Similarly, employees (sometimes limited by corporate title or function) may be permitted to charge personal expenses (limited to certain types of charges or dollar amounts) on a corporate credit card with the similar expectation that the charges will be highlighted on the next statement and promptly reimbursed.
Nonetheless, it is certainly not a desired practice for corporate employees to incur personal expenses on their employers' credit cards or vendor accounts. Similarly, if personal charges are permitted but subject to restrictions, those limits must be complied with and repayment should be promptly undertaken. In Jacques, we see an employee who did not comply with the prerequisite of at least obtaining a designated supervisor's authorization and/or signature.
A failure of the Jacques AWC is that FINRA did not explain whether Jacques (and other similarly situated Goldman Sachs employees) was strictly prohibited from using the corporate card for any, some, or all personal charges. Although that would not be exculpatory, such an explanation would provide a better context. Although the AWC asserts that Jacques engaged in a cover-up furthered by the alleged forgeries, it's not clear whether Goldman Sachs fired her for incurring personal charges and the forgeries; or whether Jacques was fired because she forged the supervisors' authorization on personal charges - that may be a relatively minor difference but it is one nonetheless.
Frankly, Jacques did not actually hide the personal nature of her charges because she seems to have highlighted that precise fact on the thirteen Expense Reports and timely tendered a reimbursement check. Certainly someone at Goldman Sachs must have been on notice for thirteen months of reports that Jacques was reimbursing the firm for personal expenses - so that doesn't strike me as a clear-cut case of hiding that conduct. That she was not authorized to incur such personal expenses and that she was required to obtain a supervisor's authorizing signature may well be damning facts here, but the AWC needed to provide a bit more detail.
Notwithstanding the somewhat murky explanations or lack thereof in the AWC, there is no excuse for forgery, and, accordingly, I concur with the sanctions imposed. Given the widespread practice of placing many types of personal charges on corporate accounts, those engaged in such conduct should carefully consider this case and its ramifications.