$273 Expense Claim Topples Morgan Stanley Broker
In another sign of firms’ increasing intolerance with the appearance of expense account improprieties, Morgan Stanley has forced out a 22-year veteran for claiming $273 of meals with his daughters as business expenses, according to regulatory filings.
John J. Baldeck was let go from the firm’s Coeur d’Alene, Idaho, branch over allegations that he requested and received reimbursement for expenses that were “personal in nature,” according to the “permitted to resign” explanation posted in June on his BrokerCheck record.
Baldeck, who is now affiliated with independent broker-dealer KMS Financial Services, appended his own explanation that suggests a tax-benefit program Morgan Stanley offers its brokers can come back to haunt them.
“I was a participant in the Morgan Stanley Automated Flexible Grid (AFG) program which deducted amounts from my net payout for business expenses,” he wrote. “Morgan Stanley determined that I was reimbursed $272.94 from those funds to pay for meals with my daughters. I have reimbursed Morgan Stanley for that amount, although I believe the AFG funds to be my funds to use.”
The program, which Morgan Stanley initiated in 2010, permits brokers to allocate a percentage of their pretax revenue each year to a reimbursement pool for business development expenses. Any money left in the account at the end of the year cannot be carried over, although the firm does permit a midyear adjustment of the allocation.
Baldeck did not respond to a call for comment, and a Morgan Stanley spokeswoman also did not respond to a request for comment.
Morgan Stanley’s sensitivity to expense-account issues appears to have grown since Finra in March imposed a bar on working in the securities industry against Tracy Chen, a former broker in its Newport Beach, Calif., office. Chen, who was fired in 2013, claimed rebates of almost $30,000 from her AFG account for jewelry and other gifts ostensibly purchased for clients that she returned to stores.
Last month Morgan Stanley ushered out Charles A. May, a top broker in Augusta, Ga., over similar charges.
Morgan Stanley is not alone in its expense sensitivity. Merrill Lynch ousted Boston-based broker Sandy Galuppo in October for “improper submission of personal expenses for reimbursement,” and last month permitted the “voluntary resignation” of John R. Nicholson, a complex manager in Cincinnati over the same issues, according to his BrokerCheck record.