FINRA Bars CCO/Registered Representative for False Attestation and Off-Channel Communications

Jeffrey K. Kirkpatrick was the CCO of investment adviser Hamilton Investment Counsel, LLC (HIC) and a registered representative of LPL Financial, LLC, the broker-dealer that held HIC’s client accounts. Kirkpatrick allegedly failed to enforce HIC’s policies regarding employees’ outside business activities (OBAs), thereby missing a potential opportunity to discover a fraud being perpetrated by another HIC principal through one of those OBAs. Last year, Kirkpatrick settled an SEC administrative proceeding in which the SEC asserted that he knew or should have known that HIC’s compliance program was inadequately implemented but failed to do anything about it. FINRA then brought a follow-on proceeding against Kirkpatrick arising out of his approval of a wire transfer requested by the principal, who later defrauded clients, and his off-channel communications with that principal. Kirkpatrick settled the FINRA proceeding, accepting a four-month suspension and $10,000 fine. This article details the facts underlying the FINRA proceeding, the alleged violations and the terms of the resolution. For discussion of the SEC proceeding against Kirkpatrick, see “SEC Action and Commissioner Peirce’s Statement Shed Light on CCO Liability” (Aug. 25, 2022).

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