Douglas Blake Solinsky, of Cortlandt Manor, has consented to a $10,000 fine, $27,622 in restitution and a four-month ban from associating with any member of the Financial Industry Regulatory Authority, for excessive and unsuitable trades in two customer accounts from 2017 to 2019.
In 2019, Newbridge Securities Corp., Manhattan, fired him and notified FINRA, a non-governmental organization that regulates brokers and broker-dealer firms.
FINRA calculates a portfolio’s annual turnover rate and cost-equity ratio to determine whether excessive trading has occurred.
The turnover rate is the number of times a portfolio of securities is exchanged for another portfolio of securities. An annual turnover of six indicates excessive trading.
The cost-to-equity ratio is the break-even point where commissions and fees are covered and the investor may begin to see a return on investments. A ratio above 20% is considered excessive.
In 2017, according to the FINRA report, Solinsky represented a 71-year-old customer from Texas whose portfolio had an average month-end equity of about $64,750. He recommended purchases totaling about $601,000.
The turnover ratio of more than nine and the cost-equity ratio of 26% meant that the investments had to grow by more than 26% in one year just to break even. The client paid $16,593 in commissions and fees.
From April 2018 to February 2019, Solinsky represented a 63-year-old plumber and 63-year-old teaching assistant from Wisconsin. Their average month-end equity was $38,700, and Solinsky recommended purchases of about $364,000.
The annual turnover rate of more than nine and cost-equity ratio of 29.25%, meant that their investments had to grow by more than 29.25% to break even. They paid $11,029 in commissions and fees.
Solinsky had faced a similar complaint in 2016, according to a FINRA BrokerCheck report. A customer claimed $400,000 in damages from unsuitable trading. The dispute was settled in arbitration in 2018 for $90,000.
In that case, Solinsky vehemently denied wrongdoing, according to the BrokerCheck report, stating that all transactions were discussed and authorized by the client and were suitable for the client’s investment goals and risk tolerance.
“The firm and Mr. Solinsky made a business decision to resolve this matter by way of settlement (which includes an express denial of any liability), in an effort to avoid the costs and distractions of further arbitration proceedings,” the report states.
FINRA and Solinsky, who neither admitted nor denied the findings in the new case, signed off on the settlement in June. FINRA publicized the action in its August disciplinary report.
After Newbridge fired Solinsky in 2019, he briefly represented Cape Securities Inc., of McDonough, Georgia, followed by Benchmark Investments and then Kingswood Capital Partners, both of Manhattan.
The BrokerCheck report also notes that federal tax liens had been filed against Solinsky in the Bronx and Westchester County from 2013 to 2021. The Westchester liens total $716,935 in unpaid federal assessments on personal income from 2006 through 2017.
