Finra Suspends Another Broker Over Expense Issue
In another example of the industry-wide crackdown on expense account improprieties, the Financial Industry Regulatory Authority has fined and suspended a former Merrill Lynch broker in Palm Beach Gardens, Fla., over a $524 reimbursement claim.
Joshua Thomas Crossman, who was fired from Merrill in January 2017 for an “inaccurate business expense reimbursement report,” agreed to a six-month suspension from the brokerage industry and $10,000 fine, according to a letter of settlement agreed to on Tuesday.
Crossman, now a registered investment adviser at Boston Private Bank and Trust in Palm Beach Gardens, Florida, did not respond to a request for comment. The Finra suspension does not affect his activities as an RIA.
At Merrill, where he worked for 18 months at its Private Banking and Investment Group that services very wealthy customers, Crossman submitted the $524 claim for mileage and dinner expenses that he said represented two meetings with prospective clients. He subsequently admitted to the firm that he fabricated the events in order to use up, and be reimbursed for, the Business Development Account (BDA) money that was deducted pretax from his compensation.
Business expense benefit policies have been tripping up a growing number of brokers in recent years, leading to monetary penalties, bans and occasional bars from regulators and dismissals by firms. The issue impelled Merrill two weeks ago to impose a mandatory review course for brokers and sales associates on BDA policies and to liberalize some documentation requirements. The firm told brokers and sales associates that 66% of expense-account submissions in last year’s fourth quarter were returned because of errors or flat-out ineligibility.
Crossman agreed to the sanctions without admitting or denying the findings, according to the letter of acceptance, waiver and consent signed with Finra. The self-regulator said he violated its catch-all Rule 2010 requiring brokers to observe “high standards of commercial honor” by making false statements to Merrill.
In some cases, Finra imposes more severe sanctions by saying that incorrect reporting could have led to books-and-records violations.
Crossman was part of a PBIG team in Palm Beach Gardens that oversaw $1.5 billion of customer assets, according to a May 2017 press release from Boston Private announcing his hire. He began his registered brokerage career in 1996 at Bear, Stearns & Co., according to his BrokerCheck history, and also has worked at Fidelity Brokerage Services, J.P. Morgan Securities, Citigroup and Barclays Capital.
Aside from the notice of his discharge from Merrill, Crossman has no other disclosures on his BrokerCheck report.
“This was uncharacteristic of Josh and is a blemish on an otherwise exemplary career,” said Marc Dobin, a Florida lawyer who represented him in the action.
In November, Finra imposed a one-year suspension and $10,000 fine against Sandy Galuppo, a veteran broker on a large team in Boston who Merrill had fired a year earlier for inaccurate BDA reports. Morgan Stanley has similarly laid off several advisors, including one who claimed less than $300 reimbursement for a meal with family, and Merrill last month permitted Michael Feller, a 20-year firm veteran in Evansville, Indiana, to resign for BDA inaccuracies.
— Jed Horowitz contributed to this article.