FINRA files complaint against Spartan Capital Securities for disclosure failures
The Department of Enforcement of FINRA has filed a complaint against Spartan Capital Securities over alleged violations of FINRA rules.
The Department of Enforcement alleges that, from January 1, 2015 to December 31, 2020, Spartan Capital Securities, LLC failed to file, or to timely file, 223 amendments to the Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5) for 72 of its registered representatives. As a result, Spartan failed to disclose, or to timely disclose, hundreds of reportable events involving its representatives, including customer arbitrations, customer complaints, bankruptcies, and unsatisfied liens and judgments.
Due to these disclosure failures, Spartan is said to have violated Article V, Sections 2(c) and 3(b) of FINRA’s By-Laws and FINRA Rules 1122 and 2010.
Among its disclosure failures, Spartan failed to amend, or to timely amend, the Forms U4 and Forms U5 of its executive officers and a branch manager to disclose customer arbitrations against those registered representatives, including primarily the Forms U4 of the firm’s two most senior executives: John D. Lowry, Spartan’s Chief Executive Officer (CEO), and Kim M. Monchik, Spartan’s Chief Administrative Officer (CAO) and Chief Compliance Officer (CCO).
Lowry and Monchik were personally responsible for ensuring that the information on their own Forms U4 was current, accurate, and complete. Lowry and Monchik, however, each failed to amend, or to timely amend, their Forms U4 to disclose arbitration filings and resolutions thereof on 38 and 15 occasions, respectively. As a result, Lowry and Monchik each violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010.
Spartan’s failure to amend, or to timely amend, the Forms U4 and Forms U5 of its executive officers and a branch manager was willful, as were Lowry’s and Monchik’s failures to amend, or to timely amend, their own Forms U4. Respondents’ willfulness is demonstrated by, among other things, their continuing refusal to disclose arbitrations despite warnings from FINRA in 2017 and 2018 that they were required to do so.
The Department of Enforcement respectfully requests that the Panel make findings of fact and conclusions of law that Respondents committed the violations and order that one or more of the sanctions provided under FINRA Rule 8310(a), including monetary sanctions, be imposed.