FINRA’s Department of Enforcement investigated Hinkle’s alleged misconduct and determined he violated his duty to supervise to establish, maintain, and enforce an adequate supervisory system and written supervisory procedures, as well as failed to adequately supervise a registered representative.
According to FINRA, between September 2012 and February 2014, several supervisory deficiencies existed at Dynasty Capital, including:
- Dynasty Capital’s written supervisory procedures did not include adequate supervisory steps to review account activity for churning and excessive trading.
- Hinkle did not utilize exception reports to assist in detecting patterns of unsuitable excessive trading.
- Hinkle did not maintain records that trades were being reviewed on a daily basis.
Moreover, FINRA found that between August 2012 and April 2014, the aforementioned registered representative excessively traded at least seven customer accounts. Specifically, FINRA alleged the churned accounts exhibited annualized turnover ratios ranging from 6.9 to 25.8. With respect to the aforementioned examples of misconduct, FINRA alleges Hinkle failed to adequately supervise the registered representative’s misconduct despite numerous red flags.
Based upon the foregoing alleged misconduct, FINRA contends Hinkle violated NASD Conduct Rule 3010, and also violated FINRA Rule 2010. For example, NASD Rule 3010(b) requires each member to establish and maintain a system of supervision that is reasonably designed to achieve compliance with applicable securities laws and regulations and with applicable NASD and FINRA Rules.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment losses and damages investing with Dynasty Capital, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact form or contact one of our attorneys at (800) 627-2179 to schedule a free consultation.