by Penn Mutual. Finally, Respondent’s motive in submitting the false report and receipts
is irrelevant; the effect, as Respondent knew when he submitted the report and receipts,
was that he received funds belonging to Penn Mutual to which he was not entitled.
Even where the conversion is not in connection with a securities transaction, it
“constitute[s] unethical business-related conduct and calls into question [a respondent’s]
ability to fulfill his fiduciary duties in handling other people’s money.”4 Accordingly,
conversion is a violation of NASD Conduct Rule 2110.5
The Hearing Panel finds that Respondent converted Penn Mutual’s funds, in
violation of NASD Conduct Rule 2110, when he obtained reimbursement for fictitious
According to the FINRA Sanction Guidelines, a bar is standard for conversion
regardless of the amount converted.7 The Department of Enforcement recommended that
Respondent be barred in all capacities. The Hearing Panel finds that there are no
mitigating factors that would warrant a sanction less than a bar in all capacities.
4 Daniel D. Manoff, Exch. Act Rel. No. 46,708, 2002 SEC LEXIS 2684 (Oct. 23, 2002) (unauthorized use of co-worker’s credit card numbers).
5 See, e.g. District Bus. Conduct Comm. v. Varites, No. LA-4293, 1991 NASD Discip. LEXIS 16 (DBBC Jan. 22, 1991) (conversion of firm funds to a representative’s own use is an intentional disregard of the “high standards of commercial honor and just and equitable principles of trade” mandated by NASD Conduct Rule 2110).
6 See District Bus. Conduct Comm. v. Kwikkel-Elliot, No. C0496004 (NAC Jan. 16, 1998) (NAC barred Ms. Kwikkel-Elliott for cheating on her expense account because her lack of honesty and veracity presented a risk to the investing public); District Bus. Conduct Comm. v. Bruun, No. C3B960004 (NAC Jan. 23, 1998) (NAC barred Mr. Bruun for cheating on his expense account).
Guidelines at 38 (2007).