November 25, 2013
You ever have your boy friend or girl friend attend what you thought was a legitimate business meal? You ever drag your spouse along? Under some circumstances, you may be on solid ground submitting the expense to your employer. Under other circumstances, that meal may not be deemed a business expense. What happens when you try to pull a fast one? Consider this BrokeAndBroker Blog.
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, Connie Louise Clarke submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Connie Louise Clarke, Respondent (AWC 1030687301, November 18. 2013).
Clarke was first registered in 2002 and during the times relevant to this matter was with Hartford Equity Sales Company, from January 2011 until November 22, 2011.
The AWC alleges that on a September 26, 2011, expense report, Clarke sought reimbursement for a meal but she falsely claimed the attendance of a guest who was not, in fact, present. Also, on a November 4, 2011, expense report, Clarke sought reimbursement for six meals with inaccurate identification of some of the attendees.
Guest Guessing Game
A guest who was not present? As in one of several guests, or as in the only guest? Inaccurate identification of some attendees? In what way(s)? According to the AWC, Clarke was having a personal relationship with an individual who "was present at the meals and not identified on the expense report." The AWC doesn't make this aspect of the allegations clear. Frankly, I don't understand FINRA's hide-and-seek identification of the cited guest. In any event, the AWC asserts that Hartford discovered the discrepancies prior to reimbursing Clarke.
Getting To 23
As if the fact pattern set forth by FINRA wasn't murky enough, the AWC then concludes with these charges:
Clarke was also responsible for tracking her business contacts and meetings in a Hartford system called FieldLink. From September 2011 to November 2011, Clarke made 23 inaccurate entries in FieldLink, incorrectly identifying meeting attendees and, in two instances, recording meetings that never occurred. By submitting two inaccurate expense reports, Clarke violated FINRA Rule 2010. Additionally, Clarke caused Hartford's books and records to be inaccurate by submitting false expense reports and entering inaccurate FieldLink entries, in violation of NASD Rule 3110 and FINRA Rule 2010.
We started with one non-present guest. Then we expanded to six meals with some inaccurate identification. And, in the end, we wind up with a perplexing 23 inaccurate entries. For the life of me, I can't understand whether the 23 cited entries pertained to the one "personal relationship" involving the one "guest" or included all sorts of other stuff that just seems to have been tossed into the old regulatory mix. The good folks at FINRA didn't exactly spell out the horrific compliance and regulatory lapses incurred by Clarke during this alleged meal reimbursement scandal.
SIDE BAR: According to online filings submitted by Hartford, the firm had "discharged" Clarke on November 22, 2011, based upon these allegations:
DURING A ROUTINE REVIEW OF MS. CLARKE'S ACTIVITIES, THE FIRM IDENTIFIED AN ISSUE WHERE REP APPEARED TO HAVE INACCURATELY ENTERED AN APPOINTMENT INTO HARTFORD'S INTERNAL APPOINTMENT TRACKING SYSTEM, FIELD LINK, THAT HAD NOT TAKEN PLACE. UPON FURTHER REVIEW, ADDITIONAL SUCH DISCREPANCIES WERE IDENTIFIED AND THE MATTER WAS REFERRED TO HARTFORD'S INVESTIGATIVE SERVICES (IS). IS CONDUCTED AN INTERNAL REVIEW OF HER ACTIVITIES AND MET WITH MS. CLARKE TO DISCUSS THE IDENTIFIED INACCURACIES. ADDITIONALLY, HARTFORD'S REVIEW IDENTIFIED EXPENSE REPORTS SUBMITTED BY MS. CLARKE WHERE MEALS WITH A PERSONAL GUEST OF MS. CLARKE WERE RECORDED AS BUSINESS EXPENSES. FOLLOWING ITS REVIEW, HARTFORD CONCLUDED THAT MS. CLARK HAD FALSIFIED EXPENSES AS BUSINESS EXPENSES IN VIOLATION OF COMPANY POLICY. BASED ON ITS FINDINGS, MS. CLARKE'S EMPLOYMENT WAS TERMINATED EFFECTIVE NOVEMBER 22, 2011.
In accordance with the terms of the AWC, FINRA imposed upon Clarke a $5,000 fine and a five-month suspension from associating with any FINRA member firm in any capacity.
Bill Singer's Comment
What was the dollar value of the improper meal reimbursements? That might be helpful in terms of putting things in perspective - especially when we're talking about a $5,000 fine. Gee, that data point didn't seem to make it into the AWC.
Were there any customers at the meals or was it just Clarke and her friend - the distinction is important because there are circumstances where a registered person may feel it socially appropriate to attend a dinner, for example, with a spouse or significant other if the customer is showing up under similar circumstances. If Clarke sought reimbursement for a meal that only consisted of her and her friend, that would weigh more heavily against her than, say, a meal with three clients, two colleagues, and her friend. Once again, that bit of information just doesn't get presented to us by FINRA.
As to the so-called 23 inaccurate entries, were all of those Clarke's intentional attempts to conceal the identity of the friend and to mischaracterize the business-related purpose of an expense, or were some of those errors inadvertent mistakes (as in failing to check off a box)?
Although I have absolutely no issue with Hartford's decision to terminate Clarke, I'm not quite sure why the events at issue rose to the level of a FINRA investigation and attendant settlement. Also, given that the allegations and assertions of facts seem both clear-cut and well documented, someone want to explain to me why this crime of the century took FINRA nearly two years to settle?
In the end, I'm skeptical. Part of that nagging doubt may be the result of the slap dash nature of the presentation in the AWC of the underlying conduct. Then there's that whole stench of sanctimonious hypocrisy that seems to arise from this pile of warm crap. Ummm . . . okay. Uh huh. Sure. Like no one in management at any brokerage firm ever padded their expenses, even just a little bit. Course not. Now I could be wrong about that. After all, I've only been on the Street for about 30 or so years. Yeah, right, that's it, I'm probably wrong. Everything involved with the business of Wall Street is strictly business, and strictly on the level. All the folks sittin' around the old business meal table are always customers and colleagues engaged in nothing but business conversations. Take a bunch of drunk old boys to a strip club and that is a legitimate business expense -- particularly if you land the account. Fly a batch of party animals to the Super Bowl and that too may be signed off on by accounting.