December 30th, 2021

More FINRA Enforcement Actions Re Inaccurate Meal Expense Reports 

Once again as reported in this Blog back in 2018 FINRA is continuing to crack down on Reps who file inaccurate firm expense accounts such as food expenses. This past year we have had another example of a Morgan Stanley Rep in the business for 34 years who allegedly filed false expense reports for over five years. Rep Kerry Moy agreed to a two month suspension and a $5000 fine to settle FINRA charges, this is after having been fired by Morgan Stanley. Notably the Rep WAS NOT accused of theft in that the charges were legitmate, but the Rep apparently permitted his assistant to submit expense reports with random client names and prospect names rather than the actual names of those who attended each meal. Therefore, this case seems like it was an act of laziness on the part of the rep, but from the view of his employer, Morgan Stanley, and FINRA, the REP had continously knowingly filed false expense reports, when if he had simply kept careful records and provided the actual accurate names of the clients and prospects for which the meals were expended for there would have been no firing or FINRA action. 

This matter highlights how an act of careless record keeping and disregard of the prohibition of submtting false reports to one's employer can have a catastrophic impact on one's career, not to mention the cost of having to defend a FINRA enforcement proceeding. This matter also highlights how FINRA often focuses on low hanging fruit in their investigations as these expense account abuse cases are typically easy for them to prove with the coopeartion of the firm which maintains the expense report submissions and the failure of a rep to provide backup for the purported charges when the firm investigates.  

We are often asked about what is the typical resolution to these types of cases. The reality is there is no "typical" outcome as they are all very fact dependent. How long did it go on for? Was it an issue of mistake rather than intentional wrongdoing? Does one have backup to show how such was a mistake? How much money is invovled? Etc. We attempt to evaluate all the facts of one's situation and place them in the best possible light starting with the initial response to the 8210 Letter from FINRA so as to attempt to convince FINRA to either not pursue the case or to ultimately issue a warning or a minimal sanctions, rather than a lenghty suspension or outright Bar.

If you have a matter you wish to discuss, please contact me at 212-764-3100 for a free consultation. 

Stuart D. Meissner Esq.