← Broker database 2023-06-29
Douglas Blake Solinsky Suspended for Excessive and Unsuitable Trading
According to FINRA, Douglas Blake Solinsky was fined $10,000, suspended from association with any FINRA member in all capacities for four months, and ordered to pay $27,622, plus interest, in restitution to customers for excessively and unsuitably trading two customer accounts.
Solinsky engaged in excessive trading in a 71-year-old customer's account that had an average month-end equity of approximately $64,750. Despite this modest account size, Solinsky recommended purchases with a total principal value of approximately $601,000 over 12 months, resulting in an annualized turnover rate just over nine. This means the entire account value was turned over nine times in a year.
The trading resulted in an annualized cost-to-equity ratio of just over 26 percent, meaning the customer's investments had to grow by more than 26 percent just to break even after paying commissions and fees. This makes profitable trading virtually impossible. The customer routinely followed Solinsky's recommendations and paid $16,593 in commissions and fees as a result of the unsuitable trading.
Solinsky engaged in similar excessive trading in an account for a married couple—a 63-year-old plumber and a 63-year-old teacher's assistant. Their account had an average month-end equity of approximately $38,700, yet Solinsky recommended purchases totaling approximately $364,000 over 12 months, resulting in an annualized turnover rate over nine. This trading resulted in an annualized cost-to-equity ratio of 29.25 percent, meaning the couple's investments had to grow by 29.25 percent just to break even. They paid $11,029 in commissions and fees.
Both customers routinely followed Solinsky's recommendations, establishing that he effectively controlled the accounts. The excessive trading generated substantial commissions for Solinsky while making it mathematically improbable that the customers could profit. This conduct represents a fundamental breach of the duty to put customers' interests ahead of the representative's financial interests.
The four-month suspension and $27,622 in restitution reflects the serious harm caused to two customers who trusted Solinsky's recommendations. For investors, turnover rates above 6 and cost-to-equity ratios above 20 percent are strong indicators of excessive trading. The suspension is in effect from July 17, 2023, through November 16, 2023.