In response to the filing of a Complaint on September 27, 2012, by the Department of Enforcement of the Financial Industry Regulatory Authority ("FINRA"), Respondent Glen William Albanese  submitted an Offer of Settlement dated November 13, 2012 which the regulator accepted.  Under the terms of the Offer of Settlement, without admitting or denying the allegations in the Complaint, Respondent Glen William Albanese  consented to the entry of findings and violations and to the imposition of the sanctions. FINRA Department of Enforcement, Complainant, vs Glen William Albanese, Respondent (Offer of Settlement, 2011026992101, November 26, 2012).

Albanese was registered with Needham & Company, LLC ( the "Firm") from April 1997 until his termination on February 25, 2011. In 2000, Albanese became the Firm's Chief Financial Officer and Financial Operations Principal.

Vendor Invoices

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Among Albanese's Chief Financial Officer duties, he was responsible for the approval of payment for vendor invoices. During the relevant period of 2006 through 2010, the Firm had written procedures in place for submitting and approving vendor invoices:

• Invoices were date-stamped upon receipt and forwarded to the accounts payable department for entry and coding in the accounts payable system.
• After initial coding, invoices were reviewed and either returned for corrections or forwarded to the Firm's Controller.
• After the Firm's Controller's review, invoices were either posted or returned for corrections.
• Posted invoices were then forwarded for manager-level approval.
• Manager approved invoices were forwarded to the Firm's Chief Financial Officer for final approval.

The Offer of Settlement alleges that Albanese did not comply with these procedures for certain vendors, specifically:

• During the relevant period, Albanese caused the Firm to pay approximately $28,700 to the printing services vendor for unnecessary blank paper products and approximately $67,900 in multiple payments for the same products (overpayments), for a total amount of approximately $96,600.
• During the relevant period, Respondent caused the Firm to pay almost $300,000 to the information technology services vendor for products and/or services that were never rendered to the Firm. The information technology services vendor's Chairman, Chief Executive Officer, and President has been a friend and neighbor since at least 2002 of Albanese - the two live on the same street and their children attend the same school.
• In December 2009, Albanese caused the Firm to pay $2,600 as a business expense to a ticket broker (used by the Firm for concerts, sporting events, and other live entertainment) for four tickets to a 2009 World Series game. Albanese approved the ticket broker invoice and he noted on the invoice that he attended the game with him: "Joe P - JP Morgan, Bruce B - OLI, and [ES] - S&R." JP Morgan was the firm's clearing agent. OLI was the Firm's office furniture vendor. S&R was the Firm's printing services vendor.

As to the vendor invoices noted above, the Offer of Settlement alleged that Albanese converted the funds for the benefit of the vendors or himself when he bypassed the accounts payable department by having the vendors send their invoices directly to him for his approval. Also, the Offer of Settlement alleged that Albanese's attendance at the World Series game with the individuals listed on the invoice was not a legitimate business expense.

Document Falsification

Sometime in January or February 2011, the Firm's Controller prepared, at the request of the Firm's CEO, a spreadsheet of payments to vendors who provided recruiting and consulting services to the Firm for the period 2006 through 2010.

Albanese instructed the Controller to reduce the annual amounts paid by the Firm to a staffing services company - Albanese provided new annual amounts (dramatically reducing the staffing services payments by $950,850) to the Controller, who subsequently changed the spreadsheet as directed by Albanese.  Albanese further altered the spreadsheet by deleting an information technology services vendor, removing $85,000 in payments made between 2007 and 2010. The altered spreadsheet was provided to the Firm's CEO.

Failure to Respond

Following FINRA's initiation of an investigation, Albanese failed to respond to January 18, and February 9, 2012, demands for information.

Adding Up The Tab

The Offer of Settlement alleges that Albanese converted funds belonging to his employer by knowingly:

• approving payments to certain vendors for products and/or services that were never rendered to the Firm;
• approving duplicative payments to certain vendors for products and/or services;
• approving payments to certain vendors for unnecessary products; and
• causing the Firm to pay for a non-business related expense.

By allegedly altering and falsifying information contained in a spreadsheet, creating false records concerning expenses, causing the firm to maintain inaccurate books and records, and failing to respond to FINRA demands for information and documents, Albanese was charged with having violated FINRA Rule 2010, NASD Rule 3110, and FINRA Rule 8210.

In accordance with the terms of the Offer of Settlement, FINRA ordered that Albanese be barred from associating with any FINRA-member firm in any capacity.

Bill Singer's Comment

Albanese was a CFO and FINOP, and given those two important titles, he just can't engage in the shenanigans disclosed in this case - Needham & Co. was not his personal piggybank.  Of course, FINRA's sense of moral outrage doesn't always seem to apply to the big boys at the big firms.  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" byInvestopedia, 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?

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:

• Morgan Stanley Broker Barred For Bogus Restaurant Expenses (July 13, 2012) Barred
• Fuggedabout Facebook Or MF Global, Get The Stockbroker With The Bouncing Checks (June 8, 2012)  $5,000 fine and 6-month suspension
• 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

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:

• 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.

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 . . .