by Bill Singer
Wall Street's High Standards And Honor Demolish Lowly Female Sales Assistant
October 17, 2012For 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, Tiffany D. Murray submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Tiffany D. Murray, Respondent (AWC 2012031149601, October 11, 2012).
From March 2010 to August 1, 2012, Murray was an associated person with The Huntington Investment Company where she served in the capacity of an unregistered sales assistant. The AWC asserts that she had no prior FINRA disciplinary history.
Goal Oriented
While associated with Huntington Investment, the AWC alleges that Murray was part of a four-person team that included two registered persons (one of whom was the team leader) and her supervisor. Around April 2011, the team leader advised Murray that she would be paid a $200 bonus for any month when the team met its sales goal. Following the team's meeting of its July 2011 sales goal, the team leader advised Murray that she had earned the promised bonus.
Normally, that's great news but for the fact that we usually don't write about the "normally" stuff in BrokeAndBroker. Here we write about the stuff that goes unexpectedly wrong at the worst possible way with the most bizarre consequences. That's about as close to a Spoiler Alert as I'm giving you.
Mileage
Sometime around August 4, 2011, Murray submitted a reimbursement form to Huntington Investment claiming approximately $200 in mileage expenses based on the purported use of her personal car for business travel. Murray, however, had not actually incurred such expenses. The AWC asserts that Murray submitted the mileage expense "without ascertaining specifically how the team leader intended for the bonus to be paid to her or how properly to receive the bonus."
High Standards And Honor
The submission of the purportedly false expense reimbursement form was deemed a violation of:
FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade
A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.
Poor, poor associated person Murray. She apparently failed to observe the incredibly high standards of commercial honor and just and equitable principles of trade that have made Wall Street the paragon of virtue that now serves as a blinding light of goodness and justice for all the world to see. In accordance with the terms of the AWC, FINRA imposed upon Murray a $5,000 fine and a three-month suspension from association with any FINRA member in any capacity.
Bill Singer's Comment
Murray is a woman, a rare commodity among Wall Street's highly compensated registered persons, of which Murray is not one - she is one of the lesser-compensated, unregistered, associated persons. Let me also politely note that this case is about $200 that Murray apparently had earned albeit her alleged efforts at self-help may not have been quite appropriate. I"m not suggesting that stealing $200 is a minor thing but in this case there's no allegation of theft, Murray appears to have earned a $200 bonus, and … well, what can I really say? You either feel that something is just not fair here or you don't.
What bothers me with this FINRA case is that it once again raises the ugliness of the double standards that permeate all of Wall Street regulation. FINRA's sense of moral outrage just doesn't always seem to apply to the big boys - be they senior management at major brokerage firms or the too-big-to-fail firms themselves. For example, remember this incident:
The Perfect Office
No longer content with the corner office or the penthouse in hues of teakwood, former Merrill Lynch CEO John Thain, whose tenure drove Merrill Lynch to lose $15 billion in the fourth quarter of 2009, spent $1,405 on a trash can. As his company was eliminating jobs, a newly acquired $87,000 rug graced the floor of his office.
Most executives hire interior designers, and Thain was no exception hiring Michael Smith, of celebrity design fame. The tab for his designer office - $1.2 million.
"5 Outrageous CEO Spending Abuses and Perks" (Forbes "Personal Spending" by Investopedia, August 3, 2011)
Thain's questionable office expenses in 2008 were well documented and have become the stuff of legend - and, yes, in the face of public outrage, he purportedly repaid the full cost of the renovation. On the other hand, did FINRA or any regulator bring charges against him for submitting those outrageous bills in the first place? Similarly, if Thain was given a regulator's credit for repaying his disputed charges, was Murray offered by FINRA the same expedient option in lieu of the suspension and fine?
Over the years, I have frequently written about business expense cases. They hit at every level of Wall Street - at Goldman Sachs, Merrill Lynch, Morgan Stanley, JP Morgan, Wells Fargo. Sometimes it's a shlub who tried to get away with buying some Christmas presents while pretending they were business expenses. Sometimes it's a misguided hot-shot broker or trader who takes a few pals and clients to a strip joint. Sometimes it's a member of the C-suite who pays hundreds of thousands of dollars to decorate the office. For example, consider these cases:
In terms of folks Mickey Mousing around with expenses, who could forget FINRA's Department of Enforcement v. Tina Newman (OHO 2008011719501, March 30, 2011), in which registered person Newman was Barred for improper use of her corporate credit card. FINRA alleged that Newman improperly:
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.
Of course, there's always the classic FINRA Department of Enforcement v. Matthew S. Kaplan (OHO 20070077587, June 28, 2008), where Kaplan was Barred for using 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 . . .
Yeah But
Okay, so in Newman, Kaplan, and so many other of these expense reimbursement cases, the key issue is that the respondent was taking money that he or she had not earned and was not entitled to. In Murray's case, she appears to have earned the disputed $200 and, frankly, I'm not necessarily buying that she thought up all on her own the ruse of submitting the travel reimbursement. The AWC is oddly silent as to the genesis of Murray's mode of seeking payment of her bonus. Was it solely her idea or did someone else - another team member, a supervisor, a higher-up - suggest to her that this might be the way to get what she was owed?
Isn't it nice to see the high-dudgeon and moral outrage of FINRA so harshly directed at this little fish for this relatively minor amount of bucks? But that we witnessed the same zeal when it comes to policing the big fish for their monstrous rip-offs - but that the industry's self-regulator had been so attentive during the events that led up to the Great Recession.
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