Imagine a situation where you supposed to keep your investments in right hands but the broker might be played against your interest. This is what happens in Spartan Capital Securities Lawsuits. This article will talk about spartan capital securities and explains its involvement in many cases of misconduct and misrepresentation of unethical practices done by its brokers.
Spartan Capital Securities
Spartan Capital Securities LLC, is a well-known brokerage firm, has been in the financial services industry for several years. The company works in New York, and provides a range of services, including investment banking, and trading. Spartan Capital Securities act as a significant player in New York financial market to build great reputation with clients after some misrepresentation by their broker agents.
The company faced many controversies, regulatory challenges and have to stand up against the regulatory bodies like Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
The core allegations of against the company revolves around allegations of misconduct and unethical practices. According to the plaintiffs, Spartan Capital Securities engaged in activities that were not in the best interest of their clients. These allegations include:
- Unauthorized trading: Executing trades without getting the clear permission of the clients.
- Misrepresentation: Providing false or misleading information about investment opportunities.
- Excessive trading: Conducting an unusual high number of transactions to generate commissions, a practice known as “churning.”
Spartan Capital Securities Lawsuits
Spartan Capital Securities lawsuit
Spartan Capital Securities was found in many lawsuits, claims and hearings from previous years due to their broker’s bad interest. There are mentioned below some Lawsuits with allegations and verdicts against spartan capital securities and their employees:
SEC v. Spartan Securities Group:
This lawsuit of SEC’s litigation was conducted by Christine Nestor, Alice Sum, Alise Johnson and supervised by Teresa Verges of Miami Regional Office. The investigation was led by Jeffrey Cook and supervised by Eric Busto and Glenn Gordon in the Miami Regional office.
In July 2021, a jury gave a unanimous verdict over the fraud by violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) against Spartan Securities, Island Stock Transfer, Carl E. Dilley and Micah J. Eldred who made misrepresentations and omissions regarding to designation of the spartan securities in filling the applications and submissions with Financial Industry Regulatory Authority (FINRA) to become free-trading and available for investors.
The evidence revealed that Spartan Securities, Island Stock Transfer and Dilley initiated and provided false information for applications filed with the Depository Trust Company (DTC), including misrepresentation of the shell status of issuers.
The evidence also showed that Island Stock Transfer and Dilley, made misrepresentations and omissions as free trading and when cause the bulk issuance and transfer of securities, including stock certificates without restrictive legends.
On August 10th, broker-dealer Spartan Securities Group, LTD., transfer agent, Island Capital Management LLC, d/b/a Island Stock Transfer and two of their principals, Carl E. Dilley and Micah J. Eldred, were ordered to pay nearly $1 million in monetary for Microcap Shell Factory Fraud. Concluding that “the evidence demonstrated that defendants abused their ‘gatekeeper’ role,” the District Court also ordered to imposed penny stock bars against Spartan Securities, and 10-year penny stock bars against Dilley and Eldred, prohibited them from participating in the issuance, trading, offer or sale of a penny stock.
Litigation Release No. 25486 / August 26, 2022
Securities and Exchange Commission v. Spartan Securities Group, Ltd., et al., No. 8:19-cv-00448 (M.D. Fla. filed February 20, 2019).
Spartan Capital Securities Sued for Churning:
Spartan Capital Securities Sued for Churning
Spartan Capital Securities formerly registered stockbroker, Joseph Patrick Fuller was found in arbitration under Financial Industry Regulatory Authority (FINRA) Arbitration No. 18-03407 (Sept. 27, 2018), claimed by customers, who requested the damages of $6,645,956.00. The accusations on fuller were:
- Fiduciary duties own to the customer had been breached
- Misrepresentations were made by the stockbroker
- Common and preferred stock transactions were in no way suitable
- The customer’s account had been churned
FINRA disclosed that fuller was terminated twice by spartan capital securities due to the allegations of misconduct. Although previous record of fuller shows accusation of stole account related documents and getting unauthorized access to Fordham’s private office location when was employed at Fordham Financial Management Inc. He was also terminated by Cape Securities Inc, due to allegations of executing trades in a customer account without the customer’s consent. Since August 15, 2019, Fuller has been registered with Worden Capital Management LLC.
Broker Misconduct by John Lowry of Spartan Capital Securities:
John Lawry was a broker registered with Spartan Capital Securities in New York. 19 consumer complaints were conducted by FINRA against John Lawry and two entered against Spartan Capital Securities alleged misconduct causing investor losses.
The allegations made in the FINRA reported arbitration claim for investment losses are as follows:
- Excessive commissions, excessive trading, unsuitability, conversion, fraud, unauthorized trading, negligence, negligent supervision, breach of fiduciary relationship, violation of FINRA rules.
- Churning, breach of contract, and fraud and misrepresentation.
- Failure to supervise.
- Misrepresentation resulting in losses.
On March 28, 2023 ,FINRA Panel gave decision of enforcement of action against John Lawry of Spartan Capital Securities will be suspended from association with any FINRA member, defined $40,000. He was also ordered to pay the hearing cost of $17.768.31.
Securities and Exchange Commission v. Spartan Trading Company,
Securities and Exchange Commission v. Spartan Trading Company, LLC, et al., Civil Action No. 23-cv-1997 (JWB/DTS) (D. Minn., filed June 29, 2023)
On June 30, 2023, The Securities and Exchange Commission (SEC) decided that, the US District Judge Jerry W. Blackwell granted an order to preserve and freeze all assets and records by the SEC. This action is part of a case against Spartan Trading Company LLC, an investment fund, recognized in 2019 by Richard Myre, Dale Dahmen, Dominick Dahmen, which sold bits over $3. 7 million from investors.
The SEC’s complaint, filed on June 29, 2023, accuses Myre and his company Spartan Trading of fraudulently marketing the business as a pooled day trading fund that would split profits with investors. However, the fund was mainly a fraud where most of the money was used by Myre prove to be unprofitable. The complaint also has accused Myre and the Dahmens of having withdrawn more than $1.9 million from the bank account for personal benefit and wants to drain more money from investors.
The fraudulent scheme started to unravel towards the end of 2022 and after a meeting in February 2023 to discuss the funds. The complaint by the SEC also has accused Spartan trading company and Myre of violating various laws that include the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. This investigation was under Lee Farnsworth and Larry Brannon from SEC and they were supervised by C. J. Kerstetter of the Chicago Regional Office.
Conclusion
Keeping your investment in right hands is only possible if you gather maximum knowledge of your broker agent and the company below which he’s working. The numerous Spartan Capital Securities lawsuits reveal a pattern of misconduct and unethical practices that have significantly impacted its clients and the financial market. The spartan capital securities lawsuits highlights the importance of being always informed about your investment in financial industry. It is very important for a financial firm to maintain its trust, transparency and ensure ethical practices in its operations.
FAQs
What are Spartan Capital Securities?
Spartan Capital Securities, LLC, is a brokerage firm based in New York, providing services such as investment banking and trading. The company has been involved in numerous controversies and regulatory challenges due to allegations of misconduct by its brokers.
What types of misconduct has Spartan Capital Securities been accused of?
The core allegations against Spartan Capital Securities include Unauthorized trading, Misrepresentation, Excessive trading (churning).
What is the SEC v. Spartan Securities Group case about?
In July 2021, the SEC accused Spartan Securities, Island Stock Transfer, Carl E. Dilley, and Micah J. Eldred of fraud. They were found guilty of misrepresentations and omissions in applications to the Financial Industry Regulatory Authority (FINRA) and the Depository Trust Company (DTC). They were not only ordered to pay nearly $1 million but they were barred from any penny stock trading.
What happened in the arbitration case involving Joseph Patrick Fuller?
Joseph Patrick Fuller, a former Spartan Capital Securities stockbroker, faced arbitration under FINRA for breaching fiduciary duties, making misrepresentations, engaging in unsuitable transactions, and churning customer accounts. He was terminated twice by Spartan Capital Securities and faced similar allegations at other firms.
What allegations were made against John Lowry?
John Lowry, a broker at Spartan Capital Securities, faced 19 consumer complaints and two FINRA arbitration claims. Allegations included excessive trading, fraud, unauthorized trading, negligence, and failure to supervise. In March 2023, he was fined $40,000 and ordered to pay hearing costs.
What is the SEC v. Spartan Trading Company case about?
In June 2023, the SEC accused Spartan Trading Company, founded by Richard Myre and the Dahmens, of fraud. They marketed the business as a pooled day trading fund but misused over $3.7 million from investors. The SEC obtained an order to freeze their assets and records, citing violations of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940.
What actions have regulatory bodies taken against Spartan Capital Securities?
Regulatory bodies such as the SEC and FINRA have imposed fines, asset freezes, and trading restrictions on Spartan Capital Securities and associated individuals. These actions conclude from investigations revealing misconduct, misrepresentation, and fraud.
