Stefan Spath Faces 20-Month FINRA Suspension
Stefan Spath (CRD #: 2876322), a broker formerly registered with MCAP, has been suspended by FINRA, according to his BrokerCheck record, accessed on July 4, 2023. Keep reading to learn more about his alleged conduct as a broker.
FINRA Suspension
On May 5, 2023, Stefan Spath consented to the entry of findings that he allegedly made intentional material misrepresentations and omissions in communications with issues about the status of Form 211 applications, and also provided false and misleading responses to FINRA requests for information. Additionally, he allegedly engaged in an outside business activity.
Alleged Misrepresentations and Omissions
According to a Letter of Acceptance, Waiver & Consent (AWC), Stefan Spath was allegedly responsible for preparing Form 211 applications to be reviewed by his firm, MCAP, and filed with FINRA on behalf of the firm’s foreign issuer clients. Issuers must file a Form 211 to initiate or resume quotations in a security.
Stefan Spath allegedly advised MCAP’s foreign issuer clients that were seeking to have their securities quoted and traded on the OTC markets, which required a priced quotation by a market maker. His responsibilities allegedly included drafting and signing Forms 211, responding to FINRA requests for information concerning these forms, and communicating with issuers about their forms.
From November 2017 through July 2019, Stefan Spath allegedly made intentional material misrepresentations and omissions of information in at least 27 emails with 10 foreign issuers. He allegedly misrepresented or gave the misleading impression that he had filed a Form 211 with FINRA or responded to a FINRA request for information.
The outcome of the Form 211 process would determine whether MCAP could initiate quotations for these issuers’ securities and by extension whether the issuers would meet one of the application requirements for admission to the OTC markets.
Alleged Making of False and Misleading Statements to FINRA
From June 2018 through April 2019, FINRA allegedly requested information to support certain Forms 211 filed by MCAP. Stefan Spath allegedly signed six false and misleading responses to these requests.
The AWC alleged that his false and misleading statements concerned how and when MCAP became aware of these issuers and whether all emails relating to the issuer were attached to these responses.
Alleged Outside Business Activity
In 2017, Stefan Spath allegedly agreed to assist a friend in securing short-term loans from investors to finance the friend’s cattle and olive farm. Stefan Spath allegedly introduced five investors (none of whom were firm clients) to the owner of the farm, who ultimately executed loan agreements totaling $450,000.
As compensation for these referrals, the farm allegedly paid Stefan Spath approximately $74,000 between November 2017 and January 2019.
Further, Stefan Spath allegedly violated MCAP’s Written Supervisory Procedures (WSPs) by failing to disclose this outside business activity, receiving compensation for business conducted away from the firm, acting as a finder, and participating in raising money for a business without firm approval.
He allegedly also falsely attested on firm compliance questionnaires in 2017 and 2019 that he had not participated in undisclosed outside business activities.
The AWC concluded that these allegations constitute violations of FINRA Rules 2010 and 3270.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
FINRA Rule 3270
FINRA Rule 3270 requires brokers to disclose any business activities they engage in outside their firm, as well as any compensation they may receive from these activities.
Sanctions
Stefan Spath consented to the following sanctions:
- $15,000 fine
- 20-month suspension
His suspension began on May 15, 2023, and will end on January 14, 2025.
You can read the full AWC here.
Tax Lien
On April 12, 2017, Stefan Spath incurred a $12,335.95 tax lien.
Background Information
Stefan Spath has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- Series 65 – Uniform Investment Adviser Law Examination
- Series 57TO – Securities Trader Exam
- SIE – Securities Industry Essentials Examination
- Series 55 – Limited Representative-Equity Trader Exam
- Series 7 – General Securities Representative Examination
- Series 24 – General Securities Principal Examination
He has also worked for the following firms:
- MCAP (CRD#:139515)
- INTL FCStone Securities (CRD#:45993)
- International Assets Advisory (CRD#:10645)
Kurta Law Can Help
If you worked with Stefan Spath and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.
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