FINRA Charges Operations Professional $5,000 for Sushi

March 17, 2021

The price of sushi -- and I'm talking about the really good stuff -- can be astronomical. We're talking hundreds, even thousands of dollars, for a meal or what may amount to a few bites. In a recent case, a Wall Street executive wound up paying $5,000. To be clear, that tab was not presented by a restaurant but in the form of a fine by FINRA, and the mandatory gratuity was a nine-month suspension. To add insult to injury, I'm wondering if the soy sauce packet ripped apart upon opening and splattered the diner. 

Case in Point

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, Robert Benjamin Caiati submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of  Robert Benjamin Caiati, Respondent (FINRA AWC 2019063369801)

The AWC asserts that in 2005, Robert Benjamin Caiati was employed by Daiwa Capital Markets America Inc. ("DCMA"), and by 2013 he was registered as an Operations Professional. The AWC asserts that Caiati "does not have any relevant disciplinary history." 

SIDE BAR: Online FINRA BrokerCheck records disclose that Caiati was first registered in 1992. 

27 Expense Reimbursement Requests

During the relevant period from July 2016 to December 2018, Caiati was a Managing Director/Head of Risk Management at DMCA. In keeping with his somewhat lofty stature, Caiati was eligible for reimbursement of certain business expenses, among which were qualifying client meals and entertainment. The AWC alleges that during the relevant period, DMCA's reimbursement protocol provided in pertinent part that:

[W]hen submitting a request for reimbursement of an expense, an employee identify the business reason for the expense and the names, business affiliations, titles and such other information about the attendees sufficient to establish their business relationship. The firm also prohibited attendees from approving their subordinates' expense reports.

The AWC alleges in part that:

From July 2016 to December 2018, Caiati submitted twenty-seven reimbursement requests, totaling $3,646.86, that contained inaccurate information regarding the purpose of the expenses and the individuals who attended the events where the expenses were incurred. Caiati described the expenses as meals or entertainment with clients or other third parties, even though in all or most instances no clients or other third parties were present. For example, in December 2017, Caiati sought and obtained reimbursement of $508.49 for a meal with his co-workers at a Japanese restaurant, describing it incorrectly as a meeting with a client, even though no clients were present. In at least seven of the requests, Caiati also omitted his manager's name as an attendee even though his manager attended the event, so his manager could approve the reimbursement.

BrokerCheck records disclose as of March 17, 2021, under the heading "Employment Separation After Allegations," that DCMA "discharged" Caiati on July 12, 2019, based upon allegations that:

Expense report inaccuracies: the listed attendees and stated business purposes for events were incorrect.

Additionally, under "Firm Statement," DCMA further disclosed that:

Failure to comply with internal policies, including those related to business expense reports. The policies were not related to credit or market risk management.


In accordance with the terms of the AWC, FINRA found that Caiati had violated FINRA Rule 2010 and imposed upon him a $5,000 fine and a nine-month-suspension from associating with any FINRA member in any capacity.

Bill Singer's Comment

Sigh . . . another day, another FINRA business expense AWC. Another fine. Another suspension.

Naah, I ain't gonna sugarcoat this one. Caiati wasn't some grunt stockbroker; he was an Operations Professional, a Managing Director, and the Head of Risk Management. Given that bevy of titles, there's just no compelling reason to dick around with under-$4,000 worth of expenses. To some extent, one could argue that Caiati was trying to build esprit de corps by taking co-workers to a pricey Japanese restaurant. Are co-workers "clients"? No. Are co-workers covered as a reimbursable business expense per DCMA's policies? No. 

Then there's that whole bit of subterfuge by Caiati involving the manager who was present for at least seven of the reimbursed events but that manager's name was conveniently omitted from the roster of attendees, which allowed that manager to approve the expenses when that manager should not have been approving those expenses because he was a guest at the meal. If my aunt were a man, she'd be my uncle. If my manager was not at the meal, he could have approved the expense, but since he was at the meal, he couldn't -- but despite being there, let's pretend that he wasn't, so, okay, now he can approve an expense that he wasn't supposed to be approving. Ahh . . . the old wink, wink, nudge, nudge, say no more!

Also READ: 

"A Business Meal That Wasn't. A Job That's No Longer. A FINRA Regulatory Settlement That Hurts" ( Blog / January 7, 2021)

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