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FINRA Fines and Suspends Former LPL-Affiliated Compliance Officer

FINRA Fines and Suspends Former LPL-Affiliated Compliance Officer. broker-dealer, brokerage, financial services, RIA, SEC, Securities and Exchange Commission

The Financial Industry Regulatory Authority fined and suspended Jeffrey Kenneth Kirkpatrick, the ex-chief compliance officer for an RIA formerly affiliated with LPL Financial, for breaking FINRA rules at his firm, which was previously involved in a $1.7 million fraud scheme.

As The DI Wire reported in July 2022, the Securities and Exchange Commission charged Eric Hollifield, a principal of Georgia-based Hamilton Investment Counsel, with misappropriating at least $1.7 million from two advisory clients and one brokerage customer and using the funds to pay for personal expenses, including the purchase of a home.

FINRA says that on July 14, 2020, Kirkpatrick, head of compliance and a principal at Hamilton, electronically signed a wire transfer request form at the request of his business partner, Hollifield, (who was a co-representative on the account at issue). Kirkpatrick submitted it to LPL to effectuate his customers’ requested transfer of $1 million from their account to the account of a third-party entity, without their permission.

According to FINRA, Kirkpatrick falsely attested on the form that he had verbally confirmed “the amount, timing and payee instructions with the customer,” when he in fact had not. As a result, Kirkpatrick violated FINRA rules by causing LPL to maintain inaccurate books and records.

Additionally, between December 2019 and June 2021, FINRA says Kirkpatrick used his personal mobile phone to communicate with Hollifield about LPL business. LPL did not permit registered representatives to send or receive business-related text messages outside of the firm’s approved text messaging application. Therefore, Kirkpatrick violated FINRA rules. LPL terminated their relationship with Kirkpatrick in October 2021.

Around the time of the $1 million transfer Kirkpatrick approved, Hollifield was funneling money from HIC client accounts into other businesses he controlled and acquired a $1.8 million estate on 37 acres in Georgia, using money from HIC clients and an HIC brokerage customer.

FINRA and the SEC have not accused or implied that Kirkpatrick was involved or aware of Hollifield’s scheme, but sanctioned him for failing to ensure the firm’s activities were compliant.

Kirkpatrick consented to a four-month suspension from associating with any FINRA member in all capacities and a $10,000 fine. He was banned by the SEC for five years in 2022 for “willfully aid[ing] and abbett[ing] and caus[ing] HIC to violate” the Advisers Act.

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