FINRA Fines and Suspends Wells Fargo Advisor Over Fictitious Expense Claims
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (FINRA) fined and suspended a Wells Fargo Advisors representative in Waco, Texas, after finding that he submitted fictitious business expense claims, according to a FINRA Acceptance, Waiver and Consent (AWC) letter.
As reported by AdvisorHub, FINRA ordered Charles J. Lewis Jr., a 31-year industry veteran, to pay a $10,000 fine and serve a one-month suspension. From 2019 through 2021, Lewis submitted hundreds of expense reports that fell below the firm’s $75 receipt requirement and received reimbursement for at least $657 in expenses he did not incur, FINRA found.
The regulator concluded that Lewis did not engage in conduct severe enough to warrant a bar, distinguishing the matter from other cases where FINRA has treated improper expense reimbursements as conversion, even when the dollar amounts were small. According to the AWC letter, Lewis submitted the fictitious expenses to offset legitimate business costs that he had incurred but failed to document with receipts.
FINRA stated that Lewis generally incurred valid expenses exceeding the falsified claims but did not reliably track or submit those legitimate expenses for reimbursement. As a result, FINRA charged Lewis with violating FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade.
Lewis accepted the sanctions without admitting or denying FINRA’s findings. AdvisorHub reports that Lewis did not respond to a request for comment sent through LinkedIn.
According to AdvisorHub, Wells Fargo said it welcomed the resolution of the matter. A firm spokesperson emphasized that Wells Fargo was not a party to the settlement and that Lewis’ conduct did not affect any clients.
FINRA noted that since Wells Fargo raised the issue, Lewis has complied with all requirements to submit receipts for expense reimbursements, including for smaller-dollar items.
Expense account issues frequently arise at wirehouse firms that operate use-it-or-lose-it programs, where brokers allocate pre-tax income for business expenses and forfeit unused funds at year-end. Lewis participated in such a program, FINRA noted. Attorneys who have represented brokers in similar matters have observed that these programs can create pressure to bend reimbursement rules to avoid forfeiting earned funds.
FINRA and the industry have pursued similar cases in the past. As AdvisorHub and other outlets have reported, regulators barred a former Morgan Stanley broker in 2016 after he expensed $273 in meals with his daughter.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra, wells fargo
