Securities Lawyers Blog
Currently financial advisor John Lowry (Lowry), currently employed by brokerage firm Spartan Capital Securities, LLC has been subject to at least 3 disclosable events. These events include 2 customer complaints, one regulatory event. According to a BrokerCheck reports most of the recent customer complaints concern either corporate debt securities or alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.
FINRA BrokerCheck shows a pending customer complaint on November 24, 2025.
Lowry was named a respondent in a FINRA complaint alleging that his member firm willfully violated Regulation Best Interest’s Care Obligation under Rule 15l-1(a)(1) of the Securities Exchange Act of 1934 (Reg BI) by failing to have a reasonable basis to recommend investments to customers. The complaint alleges that the firm recommended securities that had a total principal value of over $24 million to 191 customers, the majority of whom were retail customers, through 16 private placement offerings (the Offerings). The firm, through its CCO, failed to conduct reasonable due diligence on the Offerings. The firm generated over $2.4 million in placement fees from these unsuitable recommendations. The complaint also alleges that in connection with the offer and sale of membership interests in the issuers of these Offerings, which were three unregistered, private investment funds (collectedly, the Atlas Funds), the Respondents recklessly or, at minimum, negligently disseminated, or caused the dissemination of, false and misleading information to Atlas Funds’ investors, in contravention of Sections 17(a)(2) and (3) of the Securities Act of 1933 (‘Securities Act’). The private placement memoranda (PPMs) misrepresented that Atlas Funds would not profit from any markup charged to customers in connection with their investments in the Offerings. Further, the Supplements misrepresented the price at which Atlas Funds purchased the membership interests in pre-IPO shares and from which entity the Atlas Funds acquired those interests. The Respondents also obtained money by means of the untrue statements when they raised capital from Atlas Fund investors (i.e., firm customers), in the Offerings and when they obtained placement fees, markups, and/or management fees. In total, the Atlas Funds and its manager, at Lowry’s direction, charged customers $3.25 million in markups, which directly benefitted Lowry, who owned and controlled those entities. As a result, the Respondents concealed Lowry’s additional compensation and the full extent of his economic self-interest in the Offerings. The complaint further alleges that the firm willfully violated its Disclosure Obligations under Reg BI by failing to fully and fairly disclose in writing conflicts of interest associated with its recommendations of investments in the Offerings. The offering documents did not fully and fairly disclose material facts related to Lowry’s ownership of the Atlas Funds and economic incentive to have firm representatives recommend the private placements in the Offerings; and the CCO’s role managing the Atlas entities and performing due diligence on the Offerings for both the Atlas Funds and the firm. In addition, the complaint alleges that the firm and its CCO failed to establish a supervisory system, including WSPs, reasonably designed to achieve compliance with the Care Obligation of Reg BI as it relates to private placement offerings. The firm also willfully violated Reg BI by failing to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with the Care Obligation of Reg BI. Moreover, the complaint alleges that the firm and its CCO failed to reasonably supervise the Offerings, including by failing to conduct reasonable due diligence on the Offerings, failing to maintain any records reflecting any due diligence that was completed on the Offerings, and failing to reasonably respond to red flags concerning the private investment funds’ ownership of the pre-IPO shares involved in the offerings. Furthermore, the complaint alleges that the firm and its CCO, who was responsible for maintaining and updating the firm’s WSPs, failed to establish, maintain, and enforce written Conflict of Interest Procedures. The firm had no written policies or procedures addressing the identification, disclosure, or mitigation of conflicts of interest. As a result, the firm willfully violated Reg BI.
FINRA BrokerCheck shows a pending customer complaint on November 20, 2025.
Failure to Supervise
FINRA BrokerCheck shows a pending customer complaint on November 03, 2025.
Failure to Supervise
Non-traded REITs, oil and gas ventures, equipment leasing products, and other alternative investments are among the products included in DDPs. Investors almost never benefit from these alternative investments, which are typically inappropriate because of their high fees and expense structure. The extra commissions paid to brokers for selling these inferior investments create misleading incentives, driving an artificial demand for the products.
Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. Although brokers are required to disclose that non-traded REITs underperform treasuries and come with high risk and illiquidity, they seldom fulfill this obligation. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors. Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.
Unfortunately, these types of alternative investment products continue to popular among brokers due to their high commissions. In order to counter the perverse incentives to sell these flawed product many states now limit investors from investing more than 10% of their liquid assets in Non-Traded REITs and BDCs. Many states impose these limitations because these investments do not benefit investors.
Lowry entered the securities industry in 2001. Lowry has been registered as a Broker with Spartan Capital Securities, LLC since 2008.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.