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Regulatory Sanctions

Paying Dearly for Small Expense Report Infractions

October 23, 2018

by Howard Haykin


Fudging ones’ expense report – even when the purpose is to ‘right a wrong’ – seems innocuous enough'. That is, until one is caught. Then ‘the sh*t hits the fan’ .


A Sales Assistant with FBR Capital Markets travelled frequently and, therefore, submitted numerous expense reports each month. FBR's policies and procedures allowed for reimbursement of legitimate business-related expenses.

  • The Firm's expense reporting system received certain information regarding charges directly from the credit card issuer – e.g., date, vendor, and amount.
  • The submitter then provided additional information – e.g., business purpose of the expense and related receipts.


On 30 occasions between August 2012 and March 2016, … this Sales Assistant lost or could not find receipts for business-related expenses that qualified for reimbursement. In such situations, FBR's policies and procedures required him to provide handwritten documentation for expenses below a certain threshold and to obtain the grant of an exception for expenses above that threshold in order to be reimbursed.


Instead, he submitted receipts for personal expenses, such as personal taxi rides and meals, in close approximation to the time and amount of legitimate business-related expenses. He then entered a description in the Firm's reporting system for the personal receipt to match the legitimate, reimbursable business-related expense. In doing so, this Sales Assistant was reimbursed a total of $950.37 for personal charges to offset the business-related expenses for which he lost or did not obtain receipts.


WHAT WENT WRONG.    This Sales Assistant paid dearly for falsifying his expense reports:


  • On 6/15/16, FBR Capital Markets discharged (U5’d) him for ‘violation of firm policy related to expense reimbursement’.
  • On 4/17/17, FINRA suspended him for failing to respond to FINRA request for information.
  • On 7/5/18, FINRA fined ($5K) and suspended him (6 months) to settle charges he violated FINRA Rule 2010.



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

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016050664102.