Spartan Capital Securities Complaints: What You Need to Know

Based in New York City, Spartan Capital Securities is a broker-dealer company that provides a range of financial services and products to its customers. But throughout the years, the company has also received several complaints from investors and regulators. We’ll look at a few of the most prevalent and significant complaints about Spartan Capital Securities.

1. Regulatory Breaches

The most common and serious allegations against Spartan Capital Securities center on the company’s disregard for several legal requirements. For example, the Financial Industry Regulatory Authority (FINRA) fined the firm $600,000 and suspended it for two years in March 2023 for failing to timely amend Forms U4 and U5 of over seventy registered representatives and firm executives to disclose the filing or outcome of customer arbitrations, the receipt or outcome of written customer complaints, and reportable financial events. This deliberate breach of FINRA’s By-Laws and Rules denied investors crucial information about the company and its employees.

The Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), and the New York Stock Exchange (NYSE) are among the additional regulatory agencies that have approved Spartan Capital Securities. These sanctions stem from a variety of misdeeds, including the failure to submit timely and accurate financial reports, to maintain sufficient books and records, to not pay taxes, and to not oversee its registered representatives. These violations of regulations point to the firm’s lack of professionalism, responsibility, and openness.

2. Investor Grievances

Client annoyance and discontent with the company’s goods and services is another frequent reason for complaints lodged against Spartan Capital Securities. Since 2015, the company has received 49 client grievances; of these, 18 have been resolved, 2 have been refused, and 29 are still ongoing, according to FINRA’s BrokerCheck. In these conflicts, unsuitability, misrepresentation, carelessness, violation of fiduciary responsibility, fraud, and illegal trading are the most common accusations. The consumers are requesting more than $40 million in damages in all.

Customers have also expressed dissatisfaction with the company’s lack of responsiveness, exorbitant costs, and inadequate communication. One Yelp reviewer stated, for instance, “They are very unprofessional and rude.” Their fees and commissions are exorbitant. They offer no clarification or guidance. They ignore you because they only want your money. “They are a scam,” another Google user said. About the benefits and hazards of the investments they recommended to me, they misled me. After they lost all of my money, they disclaimed any liability. They ought to be closed since they are thieves.

3. Lawsuits and Arbitrations

As a result of the numerous complaints and allegations against Spartan Capital Securities, the firm has been involved in several lawsuits and arbitrations with its customers and regulators. Some of these cases have been resolved, while others are still ongoing. Here are some examples of the most notable cases:

• The SEC filed a civil case against the business and its CEO, John D. Lowry, in 2021, alleging that they had misled investors in a $25 million sale of Spartan securities. In addition to failing to disclose major conflicts of interest and related party transactions, the SEC claimed that the company and Lowry made false and misleading representations regarding the firm’s financial situation, business prospects, and use of proceeds. In addition to other measures, the SEC requested disgorgement, a permanent injunction, and civil penalties.
• A consumer brought an arbitration suit against the company and two of its registered representatives, Michael J. Dillon and Kim M. Monchik, in 2020. The allegations included fraud, churning, unapproved trading, breach of contract, breach of fiduciary duty, and inappropriate and excessive trading. The client demanded damages of $3.5 million.
• A consumer sued the company and one of its registered representatives, Joseph A. Farah, in 2019 for allegedly tricking him into investing in a fraudulent scheme involving GWG Holdings, Inc. The client claimed that, in addition to failing to perform sufficient due diligence, the company and Farah had misrepresented the nature, dangers, and rewards of the transaction. The client requested damages of $1.5 million.
• 4. Reputation and Reviews

It is not unexpected that Spartan Capital Securities has a bad reputation and negative ratings among its rivals and consumers, given the history and frequency of complaints against the company. Reviews of the company are primarily unfavorable on several websites, including Yelp, Google, Trustpilot, and the Better Business Bureau. The company has an average rating of 1.5 stars on these sites, and many of its clients have left negative reviews expressing their regret, wrath, and disappointment in working with the company.

In addition, the company has been named as one of the worst broker-dealers in the industry by several publications and organizations, such as Forbes, Investor’s Business Daily, and Barron’s. The company has faced criticism for its poor ethical standards, high complaint ratio, low client satisfaction, high turnover rate, and low retention rate. Additionally, the company has been charged with employing unskilled and inexperienced brokers and with failing to provide proper supervision and training.

5. Risks and Consequences

There are serious dangers and repercussions for Spartan Capital Securities and its clients as a result of the accusations against the company. The complaints may lead to financial losses, legal ramifications, regulatory proceedings, harm to the company’s brand, and decreased sales. The complaints may cause the clients to lose faith, incur legal fees, experience mental discomfort, and lose their investments. As a result, all parties must understand the possible consequences and available resolutions to the complaints.

For the firm, some of the possible outcomes and remedies for the complaints are:

• settling regulatory fines, penalties, disgorgement, restitution, and other penalties
• resolving or losing consumer-filed litigation and arbitrations
• putting remedial measures into practice, including updating guidelines and standards, improving oversight and compliance, and hiring outside experts
• enhancing openness, communication, and customer service
• restoring trust and reputation

For the customers, some of the possible outcomes and remedies for the complaints are:

• obtaining compensation through settlements, awards, or judgments for all or part of their investment losses
• attempting to settle their disagreements with the company through alternative dispute resolution procedures like mediation or arbitration.
• registering complaints to expose the company’s wrongdoing and request support from regulators, such as FINRA, the SEC, or state securities authorities
• obtaining counsel and representation from knowledgeable lawyers with a focus on securities arbitration and litigation
• transferring to a different broker-dealer company with a superior reputation and track record

6. Recommendations and Advice

Based on the analysis of the complaints against Spartan Capital Securities, we have some recommendations and advice for both the firm and its customers. For the firm, we recommend and advise:

• Adherence to all relevant laws, guidelines, and directives, as well as collaboration with regulatory bodies during any inquiries or assessments
• must update and provide all relevant information about the company and its employees on Forms U4 and U5, making them accessible to the general public via FINRA’s BrokerCheck.
• Performing comprehensive and impartial due diligence on the goods and services it provides to verify their appropriateness and suitability for its clientele
• To avoid making any false statements, omissions, or exaggerations while giving its clients truthful, accurate information and guidance.
• before carrying out any transactions, to get clients’ written consent and permission. To deliver prompt, understandable statements and confirmations.
• To avoid conflicts of interest or temptations, fees, and commissions should be fair and open.
• To swiftly and professionally address any questions, concerns, or criticism from customers and to settle any disputes in a just and kind way
• To oversee, educate, and hold its registered representatives responsible for any transgressions or misbehavior.
• Enhance client happiness, loyalty, and retention while pursuing favorable evaluations and recommendations.

For the customers, we recommend and advise:

• To investigate and confirm the credentials and history of the company and its employees, as well as to review their records on FINRA’s BrokerCheck
• To comprehend the nature, dangers, and returns of the company’s goods and services; to ask questions and get an explanation if something is unclear or confusing.
• should go over, sign, and preserve copies of any agreements, contracts, or other papers with the company for future use.
• should often check and audit their accounts and transactions, reporting any inaccuracies, irregularities, or unapproved activity.
• should examine and contrast the firm’s costs and commissions, and if at all feasible, bargain for more affordable or better terms.
• to express any worries, complaints, or displeasure with the company, and to request a remedy or payment if necessary.
• to ask another financial expert, such as a financial planner, advisor, or analyst, for assistance or a second opinion if they are unsure about their investments.
• To safeguard their rights and interests, and if the company has misled or injured them, to take legal action or initiate arbitration
• If they’re not happy or satisfied with the firm, they can go to another broker-dealer company that has a superior reputation and track record.

Conclusion

Spartan Capital Securities is a broker-dealer firm that has faced numerous complaints, both from regulators and investors, over the years. The complaints range from regulatory breaches and investor grievances to lawsuits and arbitrations. The complaints indicate a lack of professionalism, transparency, and accountability on the part of the firm.