FINRA v. Spartan Capital Securities, LLC

Spartan Capital Securities, LLC, John Dennis Lowry, and Kim Marie Monchik were named in a FINRA complaint alleging that the firm willfully violated the Care Obligation under Reg BI by failing to have a reasonable basis to recommend certain investments to customers. The complaint alleges that the firm made recommendations of securities that had a total principal value of over $24 million to 191 customers through 16 private placement offerings. The firm, through Monchik, lacked a reasonable basis to believe these recommendations were suitable because it 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 the firm, Lowry, and Monchik recklessly or, at minimum, negligently disseminated false and misleading information to Atlas Funds’ investors, in contravention of Sections 17(a)(2) and (3) of the Securities Act of 1933. The firm, Lowry, and Monchik obtained money by means of the untrue statements when they raised capital from Atlas Fund investors and when they obtained placement fees, markups, and/or management fees. 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. Monchik 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. Moreover, the complaint alleges that the firm and Monchik failed to reasonably supervise the private placement offerings, . Furthermore, the complaint alleges that the firm and Monchik failed to establish, maintain, and enforce written conflict of interest procedures.

Summary generated from official Financial Industry Regulatory Authority press release