by Bill Singer
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority (“FINRA”), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Allyson M. Brunetti submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Allyson M. Brunetti, Respondent (AWC 2011027119801, April 24, 2012).
On May 6, 2009, Allyson M. Brunetti (“Brunetti”) first became registered with FINRA with member firm MKM Partners LLC, where she was employed as Vice President, Manager of Operations, until her termination on April 1, 2011. The AWC asserts that she had no prior FINRA disciplinary history.
Bill Singer
Around October 2009, MKM provided Brunetti with a corporate credit card, which she used for both office and personal expenses. The AWC alleges that MKM had no written procedures regarding the use of corporate credit cards.
From October 2009 through February 2011, Brunetti allegedly placed approximately $21,000 in personal expenses on the card, against which she paid about $5,000 directly to the credit card issuer. Upon receipt of the card’s statements, the AWC alleges that Brunetti evidenced her review by marking her initials next to personal expenses before forwarding the statements to an MKM principal and the company’s accountants. The AWC charges that Brunetti failed, however, to initial some $13,000 in personal expenses, which caused them to be booked as business related.
According to online FINRA documents as of April 25, 2012, MKM discharged Brunetti on March 25, 2011 for:
INAPPROPRIATE USE OF FIRM CREDIT CARD
The AWC states that Brunetti agreed to repay all of her personal expenses. In a somewhat puzzling aspect of this matter, not only did MKM provide Brunetti with severance but the firm “later recharacterized the charges as loans to Brunetti.”
In deeming Brunetti’s conduct as the cause of MKM maintaining false business records, the regulator alleged that she had violated NASD Conduct Rule 3110 and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed a $5,000 fine and a two-month suspension from association with any member.
Bill Singer’s Comment
No, this is not an unheard of issue on Wall Street but, to the contrary, one that seems to recur with some surprising frequency. Similarly, it’s not a problem just at some small brokerage firm but a situation that also hits major banks and their brokerage subsidiaries. For example, consider these cases:
- Goldman Sachs Employee Fired, Fined, and Suspended For Personal Credit Card Expenses (September 20, 2011): One year suspension and $5,000 fine
- Padded Expense Accounts Ends Hartford Broker’s Career(September 7, 2011): Barred
- FINRA Bars Operations Mgr For Credit Card and Check Abuses (July 26, 2011): Barred
Mickey Mousing Around?
In FINRA’s Department of Enforcement v. Tina Newman (March 30, 2011) we learn of a registered person who was Barred for improper use of her corporate credit card. FINRA alleged that Newman improperly
- charged $10,166.34 to her two corporate American Express (“Amex”) credit cards in connection with a family vacation to Disney World in April 2006; and
- transferred Amex Membership Rewards Points (“Rewards Points”) belonging to her firm to her JetBlue frequent flyer account to reduce the cost of airline tickets for the Disney World vacation in April 2006 and for a vacation to the Bahamas in March 2007.
Accordingly, FINRA alleged that Newman improperly used her member firm’s corporate credit cards to pay for a personal vacation and misappropriated her firm’s credit card rewards points for her personal use. Subsequently, Newman reimbursed her firm for the charges but not for the credit card rewards points. FINRA found that she intentionally created fictitious and false entries in the firm’s books to cover up her conversion of firm funds for her personal benefit.
Spitzeresque
In FINRA Department of Enforcement v. Matthew S. Kaplan (OHO June 28, 2008), we have the somewhat edgy case of a Respondent being Barred based upon allegations that he had used a corporate credit card for escort services! If you would like to read a truly unusual regulatory decision, I would recommend this one to you. After all, where else might you find such a tidbit as this?:
On June 18, 2003, Kaplan had dinner and drinks with MP, a friend who also was a portfolio manager for one of Kaplan’s clients at Lazard. They discussed MP’s marital difficulties, and Kaplan suggested using an escort service as a solution to MP’s problems. Kaplan agreed to pay for the service, although MP did not know that Kaplan intended to pay for it with his Lazard charge card. Kaplan made the arrangements for the escort service and then met MP at a hotel where they availed themselves of the services offered by Exotica/Ce Soir. Although the charge was personal and not an appropriate business expense, Kaplan claimed that the $4,950 Ce Soir charge was for concert tickets for MP to see Bruce Springsteen at Giants Stadium. Lazard paid the charge…