John R. McKinstry Jr., of Saint Louis, Missouri, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he failed to cooperate in an investigation into allegations of whether McKinstry engaged in unsuitable recommendations and unauthorized lending agreements with customers. Letter of Acceptance, Waiver and Consent, No. 2015046315101(Apr. 26, 2016).
According to the AWC, McKinstry was terminated from Moloney Securities Co., Inc. on August 7, 2015, amid allegations of customer complaints. In January 2016, a FINRA investigation was launched into McKinstry’s alleged unsuitable recommendations involving four of his firm’s customers, as well as allegations of McKinstry’s unauthorized lending agreements in promissory notes which involved two customers. The AWC stated that FINRA was looking into whether material omissions and misstatements were made by McKinstry in reference to the lending agreements. Apparently, McKinstry had represented a 501(c)(3) charitable organization as an unpaid director in connection with the promissory notes.
The AWC stated that on February 21, 2016, FINRA requested, per Rule 8210, that McKinstry provide on-the-record testimony before FINRA in connection with the allegations. The AWC also stated that on March 14, 2016, McKinstry was asked by FINRA, per Rule 8210, to provide information and documentation relevant to the allegations.
Apparently, after McKinstry’s counsel made arrangements with FINRA to have additional time to respond, McKinstry eventually e-mailed FINRA’s personnel on March 28, 2016. McKinstry reportedly stated that he acknowledged the request for testimony and documentation and information, but that he would not be cooperating at any point. FINRA found that McKinstry violated FINRA Rules 8210 and 2010 as a result of his failure to cooperate in the investigation, which led to McKinstry’s permanent bar.
Public disclosure records reveal that McKinstry has been subject to twelve disclosure incidents. On September 23, 1994, McKinstry settled a customer dispute for $54,000.00 after a client alleged violations of suitability. McKinstry settled a customer dispute on March 7, 1995, after a second customer alleged suitability violations. Subsequently, on January 27, 1997, McKinstry was permitted to resign from A.G. Edwards & Sons, Inc., amid allegations of unauthorized discretionary trading.
On May 7, 1997, McKinstry was subject to a Consent Order from Missouri Secretary of State Securities Division, requiring that he not open margin accounts for clients or make unauthorized trades. On June 18, 1998, McKinstry was subject to censure and one-month suspension from the NYSE Division of Enforcement in connection with findings that McKinstry effected margin transactions on his employer’s account that were unsuitable in light of a customer’s financial profile; and thereby violated Exchange Rule 408(a) through exercising discretionary trading.
On November 19, 2002, McKinstry settled a customer dispute for $170,000.00 after a customer alleged unsuitability and churning. On July 12, 2015, and August 7, 2015, McKinstry became subject to pending customer disputes, where the customers alleged suitability violations and related investment losses.
On March 3, 2016, McKinstry became subject to a pending customer dispute, in which a customer is requesting $20,000.00 after alleging breach of contract, fraud, negligent supervision, and breach of fiduciary duty. On March 7, 2016, just prior to McKinstry’s permanent bar, he became subject to another customer dispute, where a customer is requesting $350,000.00 after alleging failure to supervise, fraudulent misrepresentations and unsuitability.
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