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Spartan Capital Securities LLC

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author

Kurta Law is investigating recommendations by Spartan Capital Securities, LLC. Our research shows that this firm employs brokers who have allegations of misconduct on their records. If you suffered losses after working with a Spartan Capital Securities broker, contact us today at (877) 600-0098.

Spartan Capital Securities (CRD # 146251) is a brokerage firm headquartered in New York, New York. According to its Customer Relationship Summary (Form CRS), the firm offers brokerage services to individuals and institutions.

The firm has also operated under the name Spartan Capital Management.

Risky Investment Products

Spartan Securities offers stocks and fixed income securities, including corporate and municipal bonds. The firm also offers the following potentially high-risk products:

Exchange-Traded Funds (ETFs)

ETFs have reputations as relatively low-risk investments. However, non-traditional exchange-traded funds may be inverse, leveraged, or both.

Inverse ETFs aim to generate a profit from investments losing money, and leveraged ETFs use borrowed money to make investments. Both of these elements greatly increase the risks associated with these investments.

Real Estate Investment Trusts (REITs)

REITs can be quite illiquid, meaning they take a long time to reach maturity. Investors may find out too late that they have to pay a significant fee to withdraw funds early. Non-traded REITs are especially risky because they do not trade on a public exchange.

Private Offerings

Private offerings are not offered on the public exchange and require the brokerage firm to perform adequate due diligence.

Without registration with the SEC, there is relatively little information for investors to evaluate when they purchase a security. This adds to the risk.

Options

Options are speculative investments that aim to correctly guess a stock’s change in price by a specific deadline.

Mutual Funds

Mutual funds allow investors to pool their wealth in a portfolio of investments, typically stocks and bonds. Actively-managed mutual funds offer different share classes, each with their own ratios of expenses.

On top of 12b-1 fees and sales charges, mutual funds also tend to generate high commissions for brokers—making them a prime target for securities fraud.

Margin Loans

Investors take out margin loans with brokerage firms in order to buy more securities. Margin accounts are required to maintain an account minimum, and if the underlying securities drop in value, the investor may be required to deposit more money or face having securities liquidated in order to meet the account minimum. 

Spartan Capital Securities Fees

Spartan Capital Securities’ Form CRS reveals the following fees:

  • Spartan Capital Securities customers pay transaction fees for stock and options trades.
  • Fixed income trades come with markups or markdowns. Ask your broker about these charges as they may not be clearly labeled – they can range from 0 to 5% of the gross trade and can be negotiated.
  • Your trading fees will typically be combined if you place multiple trades in a day in the same security on the same side of the market.
  • Clearing broker fixed fees including ticket charges, postage, and handling.

You can also request more information and fee schedules from the firm or its clearing broker, Axos Clearing.

Conflicts of Interest

Customers should be aware that the Spartan Capital Securities Form CRS states that brokers have the following conflicts of interest:

  • Brokers earn higher commissions when they trade more frequently, so they have an incentive to encourage you to trade more often.
  • Certain products may come with more commissions, creating more of an incentive for a broker to recommend them over similar, lower-cost products.

Allegations by Regulatory Authorities

The following are the most recent regulatory actions on Spartan Capital Securities’ detailed BrokerCheck record. Some of these allegations concern the firm’s alleged failure to supervise.

FINRA Rule 3110 requires firms to review their brokers’ recommendations to investors to ensure compliance with securities rules and regulations. Firms can face fines, suspensions, and even expulsions from the securities industry if they fail to appropriately supervise their brokers.

Alleged Failure to Respond to Rule 8210 Requests

On November 7, 2024, Spartan Capital Securities consented to the entry of findings that it allegedly failed to promptly respond to three FINRA Rule 8210 requests between June 2021 and August 2023.

According to a Letter of Acceptance, Waiver & Consent (AWC), the firm allegedly failed to respond by FINRA deadlines and provided incomplete responses to requests for documents and information related to investigations into the sales of membership interests in certain unregistered private funds and, separately, the firm’s calculation of its net capital.

The AWC further alleged that the firm’s supervisory system was not reasonably designed to provide timely responses to Rule 8210 requests and that it failed to revise this system despite facing expedited proceedings to suspend its membership for failing to respond to these requests.

Spartan Capital Securities consented to a censure, $115,000 fine, and an undertaking to retain an independent consultant to review the firm’s FINRA Rule 8210 compliance. You can read the AWC here.

Alleged Failure to Disclose Reportable Occurrences

Missouri disclosed on November 7, 2023, that it had fined Spartan Capital Securities $9,800 after allegedly discovering that the firm had been the subject of a FINRA action for multiple absent or late disclosures of reportable events.

Missouri alleged this constituted a violation of Missouri Code of State Regulations 30-51.160(3)(A), which requires broker-dealers to report material changes in any information disclosed in its last application.

Alleged Failure to Comply with Supervisory Agreement

On January 30, 2019, the New Jersey Bureau of Securities fined Spartan Capital Securities $15,000 following allegations that the firm failed to comply with the terms of a supervisory agreement.

According to the allegations, two regulatory actions had been instituted against a Spartan Capital Securities broker who was subject to a heightened supervision agreement. This agreement required notification of these regulatory actions directly to the New Jersey Bureau of Securities.

New Jersey also ordered the firm to cease and desist from violations of New Jersey Administrative Code Section 13:47A-14.16, known as Failure to Cooperate.

Alleged Misrepresentation of Fees

The Massachusetts Securities Division revoked Spartan Capital Securities’ registration on October 20, 2016, alleging that it engaged in dishonest and unethical conduct by misrepresenting the nature of its fees to understate the commissions it was earning.

The State further alleged that Spartan Capital Securities failed to reasonably supervise two of its registered representatives, including the firm’s co-CEO.

In addition to the revocation of its registration, the firm faced a censure, an order to cease and desist, and orders to pay a fine, disgorgement, and restitution.

Alleged Overconcentration

On October 24, 2016, Massachusetts alleged that a former Spartan Capital Securities representative placed a client in an overconcentrated position and that the firm failed to supervise the broker.

Spartan Capital Securities entered a consent order agreeing to settle with the client.

Spartan Capital Securities Brokers

The Spartan Capital Securities Form CRS also reveals that the firm hires brokers who have records of misconduct. This includes brokers who have faced regulatory suspensions and fines.

Kurta Law is aware of the following current or former Spartan Capital Securities brokers with allegations of misconduct on their records:

What Should I Do If I Lost Money with Spartan Capital Securities?

Contact Kurta Law if you believe you lost money due to broker fraud or misconduct. Our attorneys offer free case evaluations and do not collect a fee unless we win your case. Call (877) 600-0098 or email info@kurtalawfirm.com.

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.