In today's featured FINRA regulatory case, we come across Paramveer Singh, who, according to online FINRA BrokerCheck records as of July 26, 2021, was first registered in 2009. From 2014 to May 2019, Singh was registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated as a Research Associate, and from May 2019 to October 2019, as a Research Analyst with BOFA Securities, Inc. Under the BrokerCheck heading "Employment Separation After Allegations," both Merrill Lynch and BofA Securities/Merrill Lynch reported that Singh had been "discharged" on September 20, 2019, based upon allegations of "Conduct involving the use of a corporate credit card inconsistent with firm policy." Apparently, Singh's getting fired wasn't enough punishment for FINRA. Smelling blood on the water, FINRA moved in on him for the regulatory kill.
The Adult Entertainment Venue
In prosecuting its case against Singh, this is what FINRA alleged [Ed: footnotes omitted]:
FINRA's Department of Enforcement filed a Complaint against Respondent Paramveer
Singh, formerly a registered representative. The Complaint consists of four causes of action. The
first two causes of action allege that on May 30, 2019, Singh converted and misused $20,768
belonging to his then-employer, member firm BofA Securities, Inc. ("BofA"). In the early
morning hours of that day, Singh allegedly charged personal expenses at "P3," an adult
entertainment venue in New York, to his BofA corporate credit card, knowing the firm had the
financial responsibility to pay those charges. Singh's alleged use of the corporate credit card in this way was not authorized or consistent with firm policy. BofA paid the credit card company
for the charges. According to the Complaint, Singh's alleged conduct violated FINRA Rule
The third and fourth causes of action allege that Singh provided false information to
FINRA staff in a written response to a FINRA Rule 8210 request and in on-the-record ("OTR")
testimony taken under FINRA Rule 8210. Singh allegedly told FINRA staff that he did not
make or authorize the charges at P3 on his corporate credit card. He denied making a telephone
call from P3 to a credit card call center-during which, on a recorded line, the caller identified
himself as Singh, confirmed Singh's work email address and the corporate credit card's credit
limit, and tried to get another charge approved. According to the Complaint, Singh's alleged
statements to FINRA violated FINRA Rules 8210 and 2010.
at Pages 1 - 2 of FINRA Department of Enforcement, Complainant, v. Paramveer Singh, Respondent (Hearing Panel Decision, FINRA Office of Hearing Officers, Discip. Proc. No. 2019064313901 / July 22, 2021)
While associated with BofA, Singh had a BofA corporate credit card for which the firm
had financial responsibility. The credit limit on this corporate credit card was $20,000. BofA's
corporate policies provided that "Corporate Cards must not be used for personal expenditures
and must be expensed and paid in full each month." BofA employees could not use corporate
credit cards for personal expenses at adult entertainment venues. Singh certified he understood
the corporate policies and agreed to adhere to them.
at Page 5 of the OHO Decision
The theory underpinning Enforcement's case appears to be that Singh had run up a sizable debit on his personal credit card by May 10, 2019, and, when his personal credit was tapped out, wrongfully and knowingly shifted some $21,000 in additional charges onto his corporate card [Ed: footnotes omitted]:
Thus, from August 3, 2018 to May 10, 2019, the total amount charged on Singh's
personal credit cards at P3 and P3 Grill came to $38,665.94. In addition, on January 10, 2019,
Singh spent $2,457.30 at an adult entertainment venue in Las Vegas, Nevada.
Enforcement contends that in May 2019 (i.e., the time of the $20,768 in corporate credit
card charges), Singh's accessible funds and personal sources of credit were depleted. . . .
at Page 4 of the OHO Decision
As to the roughly $21,000 in contested corporate charges, they appear to have been generated on May 29, 2019, and on May 30, 2019 [Ed: footnotes omitted]:
were made to Singh's BofA corporate credit card at P3 on Wednesday and Thursday, May 29-
At 9:01 p.m. on Wednesday, May 29, 2019, a charge was made in the amount of $235 to
Singh's corporate credit card.
At 10:54 p.m., there was a charge of $678.
At 11:04 p.m., there was a charge of $104.
At 11:10 p.m., there was a charge of $915.
At 11:23 p.m., there was a charge of $2,915.
At 11:25 p.m., there was a charge of $145.
At 12:31 a.m. on Thursday, May 30, 2019, there was a charge of $1,960.
At 12:34 a.m., there was a charge of $2,915.
At 12:45 a.m., there was a charge of $327.
At 12:48 a.m., there was a charge of $1,198.
At 12:50 a.m., there was a charge of $708.
At 1:28 a.m., there was a charge of $3,623.
At 1:30 a.m., there was a charge of $2,613.
At 2:26 a.m., there was a charge of $1,670.
At 2:27 a.m., there was a charge of $1,790.
These charges totaled $21,796. The charges were adjusted and reflected on Singh's
corporate credit card statement in the amount of $20,768.54 The record does not disclose why the
charges were adjusted.
at Pages 6 - 7 of the OHO Decision
SIDE BAR: As to the roughly $21,000 in contested charges, they appear to have been generated on:
May 29, 2019, in the amount of $4,992 from 9:01 p.m. to 11:25 p.m (that's about $34.67 a minute over 144 minutes); and
May 30, 2019, in the amount of $16,804 from 12:31 a.m. to 2:27 a.m. (that's about $144.86 per minute over 116 minutes).
Unfortunately, the limits of my mathematical ability is such that I can't figure out how much of the roughtly $35 a minute or the $145 a minute charges were for steak and drinks and how much for . . . well, use your imagination.
The Ultimate Bar Tab
In response to the allegations in FINRA's Complaint, Singh denied that he converted any funds and he denied that he provide false information to FINRA. Based upon the above allegations, Enforcement sought a Bar from the OHO Hearing Panel.
No Signed Receipts
You'd think that Enforcement would have had the goods on Singh before it filed a Complaint and before it opted to move to a contested OHO hearing, right? Keep in mind that unlike the "beyond a reasonable doubt" standard that is operative in criminal trials, the lesser "preponderance of the evidence" standard is the relatively low bar the Enforcement must satisfy. Let's see what FINRA's proof was when one of its four lawyers rose to deliver an opening statement [Ed: footnotes omitted].
Enforcement issued a FINRA Rule 8210 request to BofA seeking production of any
signed receipts associated with the charges made at P3 on May 29-30, 2019. BofA did not have
possession of any signed receipts and thus could not produce any receipts to Enforcement. No
receipts were offered into evidence in the hearing.
On Thursday, May 30, 2019, two charges were made at P3 on Singh's Chase Sapphire
personal credit card, in the amounts of $3,207 and $5,226. It is not known what times these
charges were effected. The charges were credited back to Singh's account. Later, the charge in
the amount of $5,226 was reversed permanently; the $3,207 charge was reinstated. Adding the
$3,207 charge from Singh's Chase Sapphire personal credit card to the charges on Singh's BofA
corporate credit card account statement, the total amount charged to Singh's credit cards on May
29-30, 2019 was $23,975. Singh had never spent that much money at P3 at one time.
at Page 7 of the OHO Decision
Not "I" But "He" and "They"
Undeterred by the lack of any signed receipts, Enforcement moved ahead with its case. As to that whopping two-day total of $23,975 in P3 charges on the corporate card, Singh had never spent that much money at P3 at one time. Yeah, you're right, there's always a first time, however, in what now comes off as a dubious attempt to pile bricks on top of each other in order to form a wall of proof, Enforcement made much about a May 30, 2019 Telephone Call:
At 2:35 a.m. on Thursday, May 30, 2019, BofA declined an attempted P3 charge in the
amount of $2,613 to Singh's BofA corporate credit card. At 2:42 a.m., BofA Global
Commercial Card ("BofA Global") received a telephone call from a male caller ("Caller") who
tried to get this charge approved. BofA recorded this call. The Hearing Panel listened to the
audio recording, which was entered into evidence as a hearing exhibit. In the call, the Caller
identified himself as Singh and spelled out Singh's name as "Paramveer Singh, p as in peter a-ra-m-v-double e-r-s-i-n-g-h." The Caller correctly stated there was a $20,000 credit limit on
Singh's corporate credit card and verified Singh's work email address. As reflected below, the
Caller speculated that "he" or "they" "might have tried multiple times" to get earlier transactions
approved . . .
at Page 7 of the OHO Decision
Although Enforcement argued to the OHO Panel that the May 30th "caller" to BofA Global was Singh, he testified that it was not him. Enforcement said it was Singh. Singh said it wasn't him. Okay -- we got a pissin' contest. Thankfully, even in such a forum as a FINRA OHO there is some lip service paid to what comes off at times as a very diluted version of Due Process. What proof did Enforcement present other than "because we say so?" Here's how the OHO Decision laid it out [Ed: footnotes omitted]:
[N]either party presented the testimony of a voice identification expert.
There are a couple of additional facts about the May 29-30, 2019 telephone call that are
notable. First, the "he" or "they" who tried to get the corporate credit card charges through
"multiple times" were not identified. Second, the audio recording-which was supposed to have
been made from an adult entertainment venue and nightclub-does not have any background
at Page 9 of the OHO Decision
On top of the lack of the background thrum of a strip club on the all-important May 29-30th recorded conversations of Singh's purported call to BofA, we then have a very odd development when Enforcement attempted to trace the phone number from which the critical phone call was made:
Singh's personal and work telephone bills for May 30, 2019 do not reflect a call from
Singh to BofA Global. Instead, the call was traced to telephone number (xxx) xxx-5413, which
related to "HC", a real estate agent working at "KR Realty" in New York. On June 18, 2020,
FINRA staff called HC at (xxx) xxx-5413. FINRA staff's notes of the call reflect that HC did
not know Singh and was confused by the staff's questions about P3:
[FINRA staff person] "JA" asked HC if she knew Paramveer Singh. HC asked
"who" and was asked again. JA asked HC if she had this phone number for at least
a year and HC confirmed that she had this number for at least a year.
JA stated to HC that someone identifying himself as Paramveer Singh made a call
from this phone number last year at a place of business called P3. JA asked HC if
she had been to P3.
At this point, HC stated that she was really confused and asked if JA would send
her an email because she was in the middle of something.
There is no evidence that FINRA sent HC an email before or after this phone call. In the
hearing, FINRA Principal Investigator "MP" testified he was unaware of any written
communication between Enforcement and HC. MP testified there was no follow-up with HC
because JA, the FINRA staff person, "had already had a conversation with her where it's my
understanding that HC was not very enthusiastic about speaking to us." According to MP, "we did attempt to look HC up to like run background checks to see if we could notice anything that
would indicate a connection, but we didn't note anything in that regard." In sum, there were several unanswered questions about the May 30, 2019 telephone call.
Those questions were still unanswered at the end of the hearing.
at pages 9 - 10 of the OHO Decision
As a former regulator and defense lawyer, I know that not all respondents find religion when they answer questions at an OTR: some folks lie from the beginning to the end. On the other hand, many folks who know that they've been caught red handed, simply refuse to show up for the OTR, or, when asked a question, will decline to answer. As such, it's an easy case for Enforcement when a respondent shows up for an OTR, refuses to answer, and is charged with failure to cooperate with a FINRA investigation -- all of which tends to end with a Bar. Except, that's not how things went down during Singh's OTR: [Ed: footnotes omitted]:
On March 31, 2020, FINRA staff sent Singh a request under FINRA Rule 8210 to
provide OTR testimony. Singh appeared and testified on April 17, 2020.116 He testified, "I am
100 percent certain that I did not make the charges that I disputed on May 29th . . . I did not
authorize those charges and I have no idea who actually used it on that May 29th/May 30th." After listening to the audio recording of the May 30, 2019 telephone call from P3 to BofA
Global, Singh denied it was him on the call stating, "I don't think that's me, pretty confident,
at Page 15 of the OHO Decision
Enforcement Didn't Meet Its Burden of Proof
So -- what was the OHO Panel supposed to make of Enforcement's case against Singh? Thankfully, not much. This OHO Panel that did its job:
After considering the hearing testimony and exhibits, the Hearing Panel concludes that
Enforcement did not meet its burden of proof that Singh converted or misused funds from BofA,
in violation of FINRA Rule 2010. . . .
at Page 20 of the OHO Decision.
The OHO Panel's rationale for dismissing Enforcement's case seems largely predicated upon the panelists' bewilderment with Staff's lack of evidence. As is clearly expressed (and with some disdain) in the OHO Decision, FINRA's case was far too dependent upon speculation and an unseemly invitation to fill in the blanks [Ed: footnotes omitted]:
Nearly all of Enforcement's case depends on a positive identification of Singh's voice on
the May 30, 2019 telephone call to BofA Global. Having listened to the audio recording of that
call, and having compared that call to the June 1, 2019 call from Singh to the BofA Fraud
Department, the Hearing Panel cannot make the positive identification that Enforcement seeks
and needs for its case. To do so would be to engage in improper speculation. We cannot
recognize Singh's voice on the May 30, 2019 call. As a result, Enforcement did not prove the
Caller was Singh. Neither party presented the testimony of a voice identification expert to assist
the Hearing Panel.
Another lacuna in evidence (for which Enforcement is not responsible) is that BofA does
not have possession of any signed receipts associated with the charges made at P3 on May 29-30,
2019.The lack of signed receipts supports the inference that the charges were not legitimate
commercial transactions. This absence makes it even harder for the Hearing Panel to identify
Singh as the person who effected the charges.
Without a positive voice identification on the May 30, 2019 call, and without signed
receipts, Enforcement's case hinges on circumstantial evidence. But there is substantial
circumstantial evidence that cuts against Enforcement's case. The May 30, 2019 call traces, not
to any telephone number associated with Singh, but to the telephone number of HC, a real estate
agent with no known connection to Singh or P3. The Hearing Panel could only speculate as to
how Singh might have made the call from HC's phone.
at Page 21 of the OHO Decision
Mere Motive and Opportunity
Moreover, the OHO Panel made it clear to Enforcement that the existence of mere motive and opportunity should not -- should never -- satisfy the need to offer proof subject to the preponderance of the evidence standard:
Enforcement contends Singh had to turn to his corporate credit card in his May 30, 2019
visit to P3 because his accessible funds and personal sources of credit were depleted. This is
analogous to a motive-and-opportunity argument: Singh had the motive to purchase goods and
services from P3, and the available credit on his corporate credit card provided the opportunity.
But the fact that a respondent had the motive and opportunity to commit a FINRA Rule
violation, without more, does not prove that the respondent did commit the violation. Motive
and opportunity do not make up for the lack of a positive voice identification on the May 30,
2019 audio recording, the lack of signed corporate credit card receipts, and the failure of the
evidence to trace the call to BofA Global to a telephone number associated with Singh.
at Page 22 of the OHO Decision
Accordingly, the OHO Panel dismissed the Complaint against Singh after finding that Enforcement had failed to meet its burden of proof that Sing had converted funds from BofA; misused funds from BofA; provided false or misleading information in a written response to a FINRA Rule 8210 request; or provided false on-the-record testimony under FINRA Rule 8210.
Bill Singer's Comment
FINRA prosecuted its case against Singh with four -- count 'em: 4 -- Enforcement lawyers. Imagine that! FINRA has so much time and extra staff on its hands that Wall Street's self-regulatory-organization can afford the luxury to tasking four lawyers to go after a rep who was charged with converting $20,768 via corporate credit card charges. Personally, I would have thought one lawyer would have been more than enough -- okay, maybe two FINRA lawyers. But four? For this nonsense of a case? What a lousy sense of priorities. In FINRA's case against Singh, there isn't a single allegation of fraud involving any securities product. There's no allegation of any harm to a public investor. At best (or worst) we got some guy blowing his wad at a strip club. And while we got four FINRA lawyers going after a rep for "adult entertainment" charges, ya gotta wonder about those senior citizens, widows, and orphans whose brokerage accounts were gutted by a recidivist fraudster and how their cases sit in some folders on someone's desk, attracting dust.
If you want to put in the time to read the OHO Decision, knock yourself out. From my perspective as a former Wall Street regulator at the American Stock Exchange and NASD and as a veteran industry defense lawyer (and also someone who represents public customers and whistleblowers), I see why FINRA investigated the underlying facts. That much I do not criticize. What I don't understand and don't appreciate is why a case largely premised on unanswered questions was allowed to go forward. Regardless of how you may "feel" about Singh's conduct, a bedrock principle of American jurisprudence is that no respondent should have to prove his or her innocence. Much like the ethical obligation imposed upon criminal prosecutors, Wall Street regulators are charged with proving a respondent's guilt. That burden does not and should not shift upon the respondent's shoulders.
Without question, prosecutors and regulators often get a feeling in their bones that a respondent is lying -- most troubling is when they are convinced with every fiber of their body that the guy is guilty as sin but for the fact that they can't quite prove it. The thing is, however, that proof is often tough to come by, and even when you have it, you may not have enough to prove the case. Sure -- you may have a ton of circumstantial evidence, but that's supposed to allow a trier-of-fact to reasonably fill in the blanks: Circumstantial evidence is not supposed to add more blanks. Circumstantial evidence is supposed to engender reasonable inferences. When circumstantial evidence merely prompts idle speculation, that's not supposed to be enough to convict.
As to Enforcement's case against Singh, sure, some events raise questions about whether Singh was being candid in responding to various questions from the credit card company or his employer's investigators. In fairness to Singh, we should acknowledge how embarrassing (if not humiliating) it must have been for him to admit that he was patronizing what the OHO Decision euphemistically characterizes as an "adult entertainment venue." On the other hand, in addition to all the adult entertainment offered at P3, even FINRA acknowledges that P3 was also a "nightclub, and steakhouse in New York." All of which reminds me of the men who explained in the 1960s that they only read Playboy magazine for the articles. Yeah, sure you did. Which explains why the centerfold is hanging out of the magazine and appears to have been frequently read for its in-depth reportage.
Compliments to Michael Mui https://www.sackandsack.com/attorney/michael-mui/ and Jonathan S. Sack https://www.sackandsack.com/attorney/jonathan-s-sack/of of Sack & Sack, LLP law firm for a stupendous defense of Singh.