Massachusetts Securities Division

Galuppo has been the subject of three disclosure incidents consisting of a termination, investigation, and a regulatory action. Galuppo was terminated from Merrill Lynch, Pierce Fenner & Smith, Inc. for "[c]onduct including improper submission of personal expenses for reimbursement, resulting in management's loss of confidence." On or around April 11, 2017, FINRA conducted an investigation into "[p]otential violations of FINRA Rules 2010 and 4511 between January 1, 2012 and December 31, 2015." The investigation was closed on November 8, 2018 with FINRA initiating a regulatory action. Galuppo signed the Letter of AWC on October 20, 2017 and FINRA accepted the Letter of AWC on November 8, 2017. Galuppo consented to FINRA's imposition of (1) a one-year suspension in all capacities and (2) a $10,000 fine. Galuppo served his one-year suspension between November 20, 2017 and November 19, 2018. As a result of the above-stated disclosure incidents, and pursuant to the Undertakings, the Division seeks to place conditions on Galuppo's registration as an IAR of Boston Private in Massachusetts.

Consent Order - Conditional Registration

Undertaking

For a period of thirty (30) months from the date of the entry of the Order, heightened supervision of Galuppo must, at a minimum, include the following: (1) Prior to submission of any expense report and reimbursement request, Galuppo must have a face-to-face meeting with Anderson, or Anderson's successor, to review and explain all expenses. This review must include, but is not limited to, a review of transactional forms and documents and must be memorialized in writing. A copy of the review must be maintained by Anderson, or Anderson's successor, with a copy forwarded to Boston Private's Compliance Department and a copy placed in Galuppo's personnel file; and (2) The Compliance Department must, on a monthly basis, review and meet with Anderson, or Anderson's successor, to review all expense reporting and discuss compliance with Boston Private policies and procedures. All reviews must be undertaken to detect and prevent potential violations of Boston Private policies and procedures and be memorialized in writing with a copy placed in Galuppo's personnel file. For a period of thirty (30) months from the date of the entry of the Order, Galuppo must supply e-mails, calendar notes, CRM note entries and other documentation as may be requested by Anderson, or Anderson's successor and / or Boston Private Compliance Department to evidence all meals, entertainment and other expenses which correspond to receipts submitted for reimbursement. Thirty (30) months after the entry of the Order, Galuppo must submit, an affidavit stating that he has fully complied with all conditions of the Order.

FINRA

Without admitting or denying the findings, Galuppo consented to the sanctions and to the entry of findings that he submitted dozens of business expense reimbursement requests that he knew or was reckless in not knowing were not compliant with his member firm's reimbursement policies. The findings stated that Galuppo's firm permitted him to use his personal credit card to charge business expenses. When seeking reimbursement of those expenses from the firm, Galuppo was required to submit his receipts along with an expense report to document, among other things, the business purpose of the expenses and, where relevant, other persons involved or present. During the relevant period, Galuppo submitted over 600 expense reimbursement requests. Galuppo's practice was to provide his receipts to subordinate employees at the firm so that they could prepare and submit the associated expense report to the firm on his behalf. Given the frequency of his business travel and entertaining, Galuppo often provided these subordinate employees numerous receipts at the same time, and on some occasions he provided information that he knew or was reckless in not knowing was inaccurate. Galuppo's expense reimbursement requests sometimes described meals with his team members as meals with clients, or personal meals as business meals. In other instances, Galuppo also provided his subordinates inaccurate information about the reported attendees at meals. In total, FINRA found that approximately 82 expenses, primarily business-related meals, contained inaccurate information. By failing to ensure that his expense reimbursement requests were accurate, Galuppo caused, among other things, non-reimbursable expenses to be charged against his expense accounts and prevented the firm from properly ensuring that only expenses consistent with its policies be reimbursed.

Acceptance, Waiver & Consent(AWC)

Civil and Administrative Penalty(ies)/Fine(s)

$10,000.00

Suspension

All capacities

One year

11/20/2017

11/19/2018

THE CONDUCT DESCRIBED IN THE ACCEPTANCE, WAIVER & CONSENT ("AWC") IN NO WAY CONCERNS CLIENT FUNDS OR SECURITIES. THE ALLEGED MISCONDUCT RELATED TO NONCOMPLIANCE WITH MY MEMBER FIRM'S WRITTEN INTERNAL BUSINESS POLICIES. IT WAS SUBSEQUENTLY PUBLICALLY REVEALED BY MY MEMBER FIRM, HOWEVER, THAT AN INTERNAL REVIEW OF THE MEMBER FIRM SHOWED BROAD SYSTEMIC ERRORS CONCERNING ITS BROKER REIMBURSEMENT SUBMISSIONS. ACCORDING TO THAT MEMBER FIRM'S OWN PUBLIC ADMISSIONS, THERE WAS A 66% ERROR RATE OF BROKER REIMBURSEMENT SUBMISSIONS AT ONE POINT IN TIME. IN CONTRAST, THE ERROR RATE OF MY REIMBURSEMENT SUBMISSIONS, WHICH RESULTED IN THE AWC, WAS LESS THAN 14%.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Discharged

Conduct including improper submission of personal expenses for reimbursement, resulting in management's loss of confidence.