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Regulatory Sanctions

For Submitting False Expense Report, Broker Given an Expensive Lesson

July 18, 2018

by Howard Haykin


Year-end 2016 was fast approaching and a Merrill Lynch broker, based in the Palm Beach Gardens, FL, office had a predicament: approximately $555 of unused funds in his Business Development Account (“BDA”) would be forfeited unless he submitted an expense report (by January 3, 2017) for eligible expenses incurred in connection with Firm business – e.g., mileage and entertainment.


Not one “to take the high road,” this broker instructed his assistant to submit a false expense report for $524, representing that mileage and dinner expenses had been ‘incurred’ during 2 meetings and a dinner with prospective clients.


For whatever reason, the firm questioned the validity of the expenses. In response, the broker ‘confessed’ that the meetings and dinner had never taken place and that he had submitted the false expense report to avoid forfeiting the unused funds in his BDA. Merrill Lynch rejected the broker’s January 2017 expense report and, by April 2017, U5’d the broker for cause,


For (getting caught) violating FINRA Rule 2010, the broker lost his job, was assessed a $10,000 fine, and given a 6-month suspension.



This case was reported in FINRA Disciplinary Actions for July 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017053816101.