Mutual, and accepting reimbursement for $1,144.63 in expenses for which he was not
Respondent acknowledged that he submitted a false expense report and false
receipts and received money from Penn Mutual based on the false report and receipts, but
argued that his actions did not constitute conversion because: (i) he had discretion to use
the funds in the bank account, so he did not “convert” the funds he obtained; (ii) he was
entitled to the funds he received as reimbursement for other business expenses that he
had previously incurred, but not claimed, so the funds he obtained through the false
report and receipts amounted to a “wash”; and (iii) the primary reason for submitting the
false report and receipts was not to obtain funds, but to mislead Penn Mutual about his
The Hearing Panel, consisting of two members of the District 7 Committee and a
Hearing Officer, conducted a Hearing in Atlanta, GA, on April 16, 2008.1 The parties
subsequently filed post-hearing briefs, which the Hearing Panel reviewed.
The Hearing Panel finds that Enforcement met its burden of showing by a
preponderance of the evidence that Respondent violated NASD Conduct Rule 2110 when
he submitted a false expense report and false receipts, and accepted reimbursement for
$1,144.63 in expenses to which he was not entitled.
1 “Tr.” refers to the transcript of the Hearing held on April 16, 2008; “JX” refers to the exhibits submitted jointly by Enforcement and Respondent; and “RX” refers to the exhibits submitted by Respondent.