John D. Lowry, of New York, New York, Chief Executive Officer, and Kim M. Monchik, Chief Administrative Officer of Spartan Capital Securities, LLC, were sanctioned by Financial Industry Regulatory Authority (FINRA) for failing to disclose or timely disclose arbitration filings, customer complaints, and financial events on Forms U4 and U5. Spartan Capital Securities received 49 customer-initiated arbitrations between January 2015 and December 2020. These arbitrations alleged fraud, unauthorized trading, and unsuitable recommendations by Spartan’s registered representatives. Twenty-nine of these arbitrations named Lowry and Monchik, citing failures to supervise brokers accused of the misconduct. FINRA Department of Enforcement vs. Spartan Capital Securities, LLC, John D. Lowry, and Kim M. Monchik, New York, New York, Complaint No. 2019061528001 (October 9, 2024).
In addition to the arbitrations, the regulator found that Spartan failed to disclose nine written customer complaints involving investment-related issues. The securities broker dealer also neglected to report 51 financial events, including judgments, liens, and a bankruptcy petition, which affected several registered representatives.
Lowry failed to disclose 38 arbitration-related events on his Form U4. These included allegations that he was directly involved in sales practice violations as a registered representative and claims that he failed to supervise other brokers. The arbitrations resulted in awards and settlements totaling $1.6 million, with individual awards as high as $330,000. In several cases, Lowry did not disclose the outcomes, and in others, his disclosures were delayed by years.
Monchik failed to disclose 15 arbitration-related events on her Form U4. These included 12 arbitrations that named her for failing to supervise brokers who committed sales practice violations. The cases resulted in two settlements and one award totaling $360,000. One arbitration award was disclosed 562 days late, while the two settlements were not reported at all.
On October 9, 2024, FINRA sanctioned Spartan Capital Securities, Lowry, and Monchik. Spartan Capital Securities was fined $600,000, censured, and ordered to correct all outstanding disclosures. Lowry was suspended for two years in all capacities, fined $40,000, and ordered to amend his Form U4 to include the missing arbitration disclosures. Monchik was also suspended for two years in all capacities, fined $30,000, and ordered to update her Form U4 to reflect the undisclosed events.
Spartan Capital Securities, a FINRA member since July 2008, operates out of New York, NY. During the relevant period, the firm managed approximately 5,000 customer accounts with fewer than 150 registered representatives.
