Between 2014 and 2017, Fuzie participated in a particular reimbursement program of Morgan Stanley, the available funds for which were based on a percentage of each eligible registered representative's annual gross revenue. Fuzie mistakenly believed that, because the amount of funds available to her was derived from her annual gross revenue, the money belonged to her. That belief notwithstanding, Morgan Stanley's program in fact required that a client(s) or prospective client(s) be present in order for a meal to be reimbursable as a business expense. 

While participating in the reimbursement program, among the items Fuzie submitted to Morgan Stanley for reimbursement were certain meal receipts and related expense reports in which she falsely represented that one or more clients or prospective clients attended each meal. Morgan Stanley thus reimbursed her for the meals pursuant to the reimbursement program. 

Fuzie subsequently approached Morgan Stanley about her expense reimbursement requests, which were inaccurate. Morgan Stanley asked Fuzie for reimbursement, which she paid and Morgan Stanley accepted. 

FINRA Rule 2010 requires associated persons to observe high standards of commercial honor and just and equitable principles of trade. 

Based on the foregoing, Ms. Fuzie violated FINRA Rule 2010.

[r]equested and received reimbursement from the Firm for expenses described as client meal expenses, when the meals were actually personal in nature. No clients were charged for the expenses.

D. I may attach a Corrective Action Statement to this AWC that is a statement of demonstrable corrective steps taken to prevent future misconduct. I understand that I may not deny the charges or make any statement that is inconsistent with the AWC in this Statement. This Statement does not constitute factual or legal findings by FINRA, nor does it reflect the views of FINRA or its staff.

Respondents in a settled disciplinary action may submit a Corrective Action Statement and/or a Mitigation Statement to NASD Regulation. This article clarifies the NASD policies regarding such Statements.

A Letter of Acceptance, Waiver and Consent (AWC) permits a respondent in an NASD Regulation disciplinary action to settle the matter prior to the filing of a formal complaint. A Corrective Action Statement may be attached to the AWC, which is filed with the SEC and available to the public, provided such statement is: (1) limited to demonstrable steps taken to correct a problem associated with the disciplinary action; (2) generally no longer than 2-3 pages; and (3) contains the following legend:

This Corrective Action Statement is submitted by the Respondent. It does not constitute factual or legal findings by NASD Regulation, Inc., nor does it reflect the views of NASD Regulation, Inc., or its staff.

Separately, respondents may submit a Mitigation Statement for consideration by NASD Regulation and the National Adjudicatory Council. Generally, such Statements are used to describe mitigating circumstances surrounding the violation for the decision maker to consider in its review of the terms of a settlement. Unlike Corrective Action Statements, Mitigation Statements are not attached to the AWC or public order.

Respondents may also settle a matter after the complaint is filed by submitting an Offer of Settlement. While both Corrective Action and Mitigation Statements may be submitted to NASD Regulation in connection with Offers of Settlements, these Statements are not attached to the final Order Accepting the Offer of Settlement, which is filed with the SEC and available to the public.

NASD Regulation will not accept Corrective Action or Mitigation Statements that deny the allegations or are inconsistent with the findings in the settlement. . .

FINRA AWCs permit the attachment of a Corrective Action Statement to demonstrate the steps taken by a respondent to prevent future misconduct subject to the understanding that such an attachment may not deny the charges or make any statement that is inconsistent with the AWC. Further the Corrective Action Statement does not constitute factual or legal findings by FINRA, nor does it reflect the views of FINRA or its staff.

Statement of Corrective Action

Ms. Fuzie participated in Morgan Stanley's Reimbursement Program When Ms. Fuzie realized she was incorrectly utilizing the Reimbursement program she approached management to correct the mistake and reimbursed Morgan Stanley. 

This Corrective Action Statement is submitted by the Respondent. It does not constitute factual or legal findings by FINRA, nor does it reflect the views of FINRA, or its staff. 

FINRA is issuing this Notice to restate and supplement prior guidance regarding the circumstances under which a firm or individual may influence the outcome of an investigation by demonstrating extraordinary cooperation. This Notice incorporates FINRA's prior guidance and provides clarification and additional information about how FINRA assesses whether a potential respondent's cooperation is "extraordinary" and distinct from the level of cooperation expected of all member firms and their associated persons. 

One Size Doesn't Fit All

There's really no way that the 19-23 Notice will get used to benefit the industry's working men and women, or FINRA's Small Member Firms. Like I said, this is a bit of mutual back-scratching between FINRA and its powerful Large Member Firms. Frankly, even FINRA knows what this is all about. Consider the discomfort with which the regulator posed the following question and answered it [Ed: footnotes omitted]:

Can Individuals Also Receive Credit for Extraordinary Cooperation? 

Credit for extraordinary corrective measures and cooperation is available to individuals as well as firms. FINRA believes many of the principles discussed above may apply equally to individuals. For example, although individuals may not be able to correct deficient firm procedures and systems, they may still self-report misconduct, provide substantial assistance during an investigation, and pay restitution to customers with appropriate notice to and involvement by a member firm. However, the presence of aggravating factors may weigh against credit for extraordinary cooperation, and certain aggravating factors are more likely to be present in cases involving individuals, such as intentional or reckless misconduct, attempts to conceal misconduct from a member firm, and misconduct notwithstanding prior warnings from a supervisor.

In evaluating whether to give credit to an individual, FINRA also will consider the same four general factors outlined in the SEC's policy regarding cooperation by individuals: (1) the assistance provided by the individual; (2) the importance of the underlying matter in which the individual cooperated; (3) the societal interest in holding the individual accountable for his or her misconduct; and (4) the appropriateness of credit based upon the profile of the cooperating individual.

Pages 10 - 11 of the 19-23 Notice 

I always love it when someone asserts a fact as if the mere act of stating it renders it true. Interesting that FINRA asserts that "certain aggravating factors are more likely to be present in cases involving individuals, such as intentional or reckless misconduct, attempts to conceal misconduct from a member firm, and misconduct notwithstanding prior warnings from a supervisor." So, let me get this: Aggravating factors that would cancel out credit for extraordinary cooperation are "more likely to be present in cases involving individuals" (in contradistinction to large banks or broker-dealers). Says who?  Did FINRA learn nothing from the Great Recession? Does FINRA truly believe that only an associated person would ever engage in "attempts to conceal misconduct"? Should I dredge up the Madoff and Stanford frauds? Does FINRA not understand the attempts to conceal misconduct was the cornerstone of all the illegal, unauthorized account openings by its major firms? Where does FINRA think the impetus came for bid rigging?  Where does FINRA think the idea to look the other way arises when AML concerns attach to a huge client? FINRA's bias against the little guy and in favor or its larger firms is on full display with its inept and clumsy exposition of what constitutes extraordinary cooperation and when such conduct qualifies for sanction mitigation.  What insincere crap it is for FINRA to claim that it will take into consideration "the societal interest in holding the individual accountable for his or her misconduct." The little guy and small firm never get a fair break in self regulation. The system is rigged against them. Time and time again, when FINRA can and should show some leniency with imposing sanctions against smaller firms or individuals, FINRA never quite issues the credit. For a better sense of how FINRA's scales are unfairly balanced, take a look at FINRA's dealings with the likes of; 

Howard Feigenbaum

http://www.brokeandbroker.com/index.php?a=topic&topic=sharemaster 

Johnny Burris

http://www.brokeandbroker.com/index.php?a=topic&topic=burris 

Richard Botkin

http://www.brokeandbroker.com/index.php?a=topic&topic=botkin

(1) the assistance provided by the individual; (2) the importance of the underlying matter in which the individual cooperated; (3) the societal interest in holding the individual accountable for his or her misconduct; and (4) the appropriateness of credit based upon the profile of the cooperating individual.

Between 2014 and 2017 . . . Fuzie mistakenly believed that, because the amount of funds available to her was derived from her annual gross revenue, the money belonged to her. . . .

While participating in the reimbursement program, among the items Fuzie submitted to Morgan Stanley for reimbursement were certain meal receipts and related expense reports in which she falsely represented that one or more clients or prospective clients attended each meal. Morgan Stanley thus reimbursed her for the meals pursuant to the reimbursement program. 

Fuzie subsequently approached Morgan Stanley about her expense reimbursement requests, which were inaccurate. Morgan Stanley asked Fuzie for reimbursement, which she paid and Morgan Stanley accepted. . .

What insincere crap it is for FINRA to claim that it will take into consideration "the societal interest in holding the individual accountable for his or her misconduct." The little guy and small firm never get a fair break in self regulation. The system is rigged against them. Time and time again, when FINRA can and should show some leniency with imposing sanctions against smaller firms or individuals, FINRA never quite issues the credit.