FINRA is an independent organization responsible for overseeing the securities industry. They aim to safeguard investors while upholding fair markets and ensure brokerage firms comply with applicable regulations.
According to the complaint, Reda recommended his customers engage in an active trading strategy based on anticipating corporate announcements, leading them to pay substantial commissions and fees for such an arrangement.
FINRA
FINRA, or Financial Industry Regulatory Authority, is an independent self-regulatory organization within the securities industry that sets and enforces rules for brokers, investors, and financial advisers, investigates investor disputes, and mediates the settlement thereof. With an overall mandate to protect investors and maintain fair markets, FINRA oversees professional training courses for registered representatives and testing services. Members pay annual membership dues, while dispute resolution services and market regulation through contracts with exchanges and market utilities are provided through agreements between FINRA members.
Spartan Capital Securities LLC (“Spartan”) violated its regulatory duties as required by FINRA rules. More specifically, in this instance, the broker-dealer failed to adequately supervise its employees, resulting in customer complaints and investment losses for customers and investors alike.
The lawsuit alleges that from January 2017 through December 2019, Spartan engaged in illegal selling practices by selling unsuitable securities to customers, placing their accounts into speculative trades, and anticipating corporate announcements that might positively influence its stock price, leading to significant commission fees and costs.
Furthermore, the complaint alleges that Spartan did not inform its customers about inappropriate trading and did not provide an accurate rundown of historical returns for various investments – both are severe violations of FINRA regulations that could cause significant financial loss for investors.
Brokerage firms and their registered representatives must FINRA disclose any customer arbitrations to FINRA by legal regulations. Failing to do so could result in fines or suspensions; even permanent cancellation of registration could occur as a result.
Investors can quickly determine whether a brokerage firm or registered representative has been disciplined for violations by accessing FINRA BrokerCheck’s free database, available 24/7. Investors can then view a comprehensive list of actions against that specific firm or individual. At the same time, its contents are continually updated as decisions regarding misconduct or other events come out from FINRA.
SEC
The Securities and Exchange Commission (SEC) is integral to the securities industry. It oversees and regulates significant market players such as brokerage firms, stock exchanges, clearing agencies, and credit rating agencies; additionally, it helps companies interpret rules and forms they must abide by while reviewing new or revised regulations as needed.
The SEC’s primary responsibility is protecting investors. One way they do this is through strict regulations and overseeing all companies to ensure that all rules are followed; additionally, the SEC ensures companies disclose pertinent information when going public and provides investors with essential updates from corporations that initially go public. Its Division of Corporation Finance ensures this occurs, while its Investment Management assists it by overseeing major investment firms, securities exchanges, and self-regulatory organizations to further its mission of investor protection.
At Spartan Capital Securities, Reda was accused of engaging in unsuitable securities trades for customers – known as churning. Additionally, he engaged in excessive trading and unauthorized trading without informing his employers properly; further, he violated both FINRA and SEC rules while failing to consider the fees/commissions that his trading strategy may cost them.
According to FINRA’s complaint against Reda, he employed a speculative investing strategy with more than 60 customer accounts and made active trades while anticipating corporate announcements that may affect stock prices. As a result of these trades, he earned over $934K in commissions and fees.
Reda is also accused of misleading customers by failing to disclose customer disputes and disciplinary actions to his employer or inform his firm about federal tax liens and outstanding judgments against him.
The Securities and Exchange Commission’s role in the securities industry is safeguarding investor funds while creating an equitable marketplace. They have established a robust regulatory framework, which includes licensing, registration, and dispute resolution procedures. FINRA and the SEC remain committed to working together to ensure financial markets are safe and transparent for all.
Reputation
As a registered broker-dealer in the United States, Spartan Capital Securities must comply with FINRA regulations, which protect investors’ safety and market stability. Spartan Capital Securities takes these responsibilities seriously and has established effective compliance measures. Their compliance demonstrates their dedication to their customers while building investor trust.
Spartan Capital Securities LLC, located in New York City, provides investment products and services such as securities brokerage, asset management, and institutional trading to individual investors, large corporations, and financial institutions. Their reputable representatives have even earned several awards for their exceptional performance.
FINRA recently charged Marc Augustus Reda of Spartan Capital Securities in New York City with multiple regulatory infractions that caused his customers to incur losses. According to FINRA’s allegations, Reda recommended risky trading strategies and made unnecessary trades that cost his customers over $2 Million in extra fees and commissions.
Reda is also accused of offering inappropriate investments to his customers, such as high-risk, leveraged investments and unsuitable products like precious metals, which violated FINRA suitability rules and misrepresented himself to customers.
In addition to these allegations, FINRA found that between January 1, 2015, and December 31, 2020, Spartan Capital Securities, LLC failed to file 223 amendments of Form U4 and Form U5 on 72 stockbrokers between them – these forms are required when brokers report discipline events or other information to FINRA.
If you have lost money due to financial advisor misconduct, filing a complaint with FINRA immediately is critical to recovering losses and receiving compensation for investments. A competent FINRA arbitration lawyer can also be invaluable when filing claims with them and helping recover them for you.
Spartan Capital Securities must abide by FINRA regulations and demonstrate high professionalism and integrity; however, mistakes happen. Spartan Capital Securities bears responsibility for the actions or inactions of their investment advisors and stockbrokers and is thus accountable if investment losses have occurred due to misconduct committed against you by these professionals. As soon as any such wrongdoing occurs, legal advice must be sought immediately to seek recourse.
Fees
FINRA plays an instrumental role in safeguarding honest and open markets for securities trading. Their primary responsibility is protecting investor funds while upholding existing restrictions placed upon brokerage firms and financial advisors. Furthermore, FINRA collaborates closely with other regulators, such as the SEC, to ensure a financial industry free from corruption or illegal activities.
FINRA recently initiated a disciplinary proceeding against Spartan Capital Securities broker Marc Reda. According to this self-regulatory body, from January 2017 until December 2019, Reda recommended unsuitable investment strategies, such as actively trading stocks ahead of corporate announcements; Reda failed to consider that this strategy’s substantial commissions and costs made it unlikely his customers would make any profits.
Early this year, a Spartan Capital Securities customer complained against them for making unauthorized trades in her account. While they reversed these unauthorized transactions and discharged the broker involved, she was not compensated fully for her losses.
Spartan Capital Securities has been subject to numerous customer and regulatory complaints filed with FINRA and state regulators and disputes brought forth by investors against it. At The Law Offices of Robert Wayne Pearce, we have investigated these disputes on behalf of investors claiming against Spartan Capital Securities and its brokers.
According to a FINRA complaint, this firm was also found guilty of breaking several rules concerning unwarranted trades and excessive trading activity within customer accounts. Furthermore, they violated Rule 4530, which mandates brokerage firms keep records of all customer account transactions, including copies of documents sent between customer accounts and electronic communications between customer and brokerage firm accounts.
Spartan Capital Securities, its officers, directors, and associated persons were charged with breaking multiple FINRA rules through misrepresentations or omissions during bulk issuance and transfer transactions, such as selling stock certificates without restrictive legends.
