Securities Lawyers Blog
The securities lawyers at Gana Weinstein LLP represent investors who have been mistreated by their brokers and suffered investment losses. Our firm is experienced in bringing claims against brokerage firms, such as Spartan Capital Securities, LLC, to hold Wall Street responsible for their misconduct. When a client contacts our firm they can expect that our attorneys will have the knowledge and ability to evaluate the potential claims and analyze their trading activity for red flags of misconduct. Our consultations are designed to help provide clients with all available options.
Spartan Capital Securities is a full-service broker-dealer that handles agency and riskless principal securities transactions and provides investment banking services, including mergers and acquisitions advisory, restructurings, and capital raising through private placements. Formed as a New York limited liability company in 2007 and headquartered at 45 Broadway in New York City, the firm is a wholly owned subsidiary of Spartan Capital Holdings and is registered in all 50 states.
Spartan Capital Securities, LLC – By the Numbers:
- CRD #: 146251
- Regulatory Events: 11
- Arbitration Events: 4
- Broker Employees: 57
Spartan Capital Securities, LLC – In the News:
FINRA v. Spartan Capital Securities, LLC (Case #2021071714201) – The Department of Enforcement alleges that from April through July 2021, Spartan Capital Securities LLC, its Chief Executive Officer John Dennis Lowry, and its then-Chief Compliance Officer Kim Marie Monchik engaged in a scheme to defraud firm customers who owned restricted shares of a pharmaceutical issuer that they wished to sell shortly after the company’s initial public offering, which Spartan underwrote. Spartan had served as placement agent for the company’s private offerings in 2017 and 2019, receiving millions of shares, some of which it distributed to employees including Monchik. Spartan, through Monchik, told customers they would need to complete a cumbersome and time-consuming process to have the share restrictions lifted, while Spartan, Lowry, and Monchik were aware of a process by which holders of restricted shares could sell their stock immediately.
FINRA v. Spartan Capital Securities, LLC (Case #2018056490335) – For more than four years, Spartan Capital Securities, LLC, defrauded customers by engaging in widespread churning, generating millions in revenue and causing customers millions in harm. Spartan’s business model depended on this misconduct – approximately two-thirds of the firm’s trading revenue and one-third of its overall revenue, more than $46 million in total, was generated from more than 1,200 accounts with a cost-to-equity ratio greater than 20% from January 2018 to April 2022. This complaint focuses on 114 of those accounts, which incurred nearly $10 million in total trading costs and suffered nearly $8 million in total investment losses. The firm facilitated this churning and excessive trading, failing to take any meaningful steps to supervise the 39 registered representatives who carried out this misconduct on the firm’s behalf. Spartan even permitted one representative to excessively trade in client accounts after FINRA Enforcement filed a churning complaint against him, and until he was barred. From January 1, 2018, to April 30, 2022 (the “relevant period”), Respondent Spartan Capital Securities, LLC (“Spartan”)—acting through Respondents James Pecoraro, John Stapleton, and Michael Darvish (collectively, the “Respondent Representatives”), and through 36 non-respondent Spartan Representatives, all but one of whom FINRA has already barred or otherwise disciplined (collectively with the Respondent Representatives, the “Spartan Representatives”)—excessively traded 114 customer accounts, 35 of which were churned. The trading in the 114 customer accounts, which included 53 accounts belonging to senior customers, resulted in cost-to-equity ratios ranging from approximately 16% to 491%, and turnover rates ranging from 5 to 184. This misconduct included churning and excessive trading after the June 30, 2020 effective date of Regulation Best Interest (“Reg BI”). Between Reg BI’s effective date and the end of the relevant period, Spartan excessively traded 92 retail customer accounts, many of which were churned. Spartan’s post-Reg BI churning and excessive trading of these customers’ accounts resulted in nearly $7 million in total trading costs and nearly $6 million in total losses. By churning customer accounts, Spartan, Pecoraro, and Stapleton willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and violated FINRA Rules 2020 and 2010. By excessively trading customer accounts, Spartan and the Respondent Representatives willfully violated Reg BI (for conduct on or after June 30, 2020), Spartan, Pecoraro, and Darvish violated FINRA Rule 2111 (for conduct before June 30, 2020 and for conduct after June 30, 2020, with respect to two non-retail customers’ accounts), and Spartan and the Respondent Representatives violated FINRA Rule 2010.
FINRA v. Spartan Capital Securities, LLC (Case #2021069218305) – The Department of Enforcement alleges: Between March 2021 and October 2021 (the “relevant period”), respondent Spartan Capital Securities, LLC (“Spartan”) made 346 recommendations of 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 (“Offerings”). Spartan lacked a reasonable basis to believe these recommendations were suitable or in the best interest of its customers because it failed to conduct reasonable due diligence on the Offerings. Spartan generated over $2.4 million in placement fees from these unsuitable recommendations. By failing to have a reasonable basis to recommend these investments, Spartan willfully violated Regulation Best Interest’s (“BI”) Care Obligation under Rule 15l-1(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), and it violated FINRA Rules 2111 and 2010.
FINRA v. Spartan Capital Securities, LLC (Case #2022075597102) – Between June 2021 and August 2023, Spartan failed to timely respond to three requests made pursuant to FINRA Rule 8210. Spartan did not fully comply with these three requests until after FINRA issued four follow-up FINRA Rule 8210 requests and pursued three expedited proceedings to compel its compliance. Therefore, Spartan violated FINRA Rules 8210 and 2010. From June 2021 through August 2023, Spartan also has failed to reasonably supervise the firm’s compliance with FINRA Rule 8210. Among other things, Spartan did not have a reasonable system to track deadlines for Rule 8210 requests and the firm did not adequately staff its compliance department or train its existing staff to respond to Rule 8210 requests. Spartan failed to take reasonable measures to improve its supervision system despite facing three expedited proceedings for failures to respond to Rule 8210 requests in less than two years. As a result, Spartan violated FINRA Rules 3110(a) and 2010.
FINRA v. Spartan Capital Securities, LLC (Case #2019061528001) – Member firm failed to amend, or timely amend, on 220 occasions, the Forms U4 and Forms U5 of its registered representatives to disclose the filing or disposition of customer arbitrations, the receipt or disposition of written customer complaints, and reportable financial events. Member firm’s failure to disclose the filings or dispositions of customer arbitrations naming firm officers was willful. Member firm’s Chief Executive Officer willfully failed to amend his Form U4 38 times to disclose, or timely disclose, the filing and disposition of customer arbitrations in which he was a named respondent. Member firm’s Chief Administrative Officer willfully failed to amend her Form U4 15 times to disclose, or timely disclose, the filing and disposition of customer arbitrations in which she was a named respondent. Held, findings of violations affirmed, and sanctions modified.
Gana Weinstein LLP has successfully litigated broker disputes through verdict or settlement. We represent both individuals and institutions throughout the country in FINRA arbitration, as well as commercial litigation in state and federal courts. Our consultations are both free and thorough and our securities litigation attorneys can help you uncover wrongful activity in your account.