Marc Augustus Reda of New York New York a stockbroker currently registered with Spartan Capital Securities LLC has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement with recommending unsuitable transactions for 66 customer accounts at Spartan Capital Securities and for churning those accounts. Department of Enforcement v. Marc Augustus Reda Complaint No. 2019063526901 (June 15, 2021).
According to the Complaint, between January of 2017 and December of 2019, Spartan Capital Securities customers had been advised by Reda to take part in an active trading strategy. The regulator contends that this strategy entailed trades to be made just prior to corporate issuer’s announcements. The strategy allegedly failed to be appropriate because of how Reda did not consider the costs and commissions including how this would impair customers’ profitability. The Complaint states that the strategy harmed customers through the high costs imposed by Reda as part of this strategy.
Department of Enforcement alleges that 66 customer accounts had been affected by Reda’s trading. Between January of 2017 and December of 2019, customers were allegedly charged $952,764.00 in commissions because of Reda. Those customers supposedly sustained $934,482.00 in losses. The regulator indicated that 54 accounts contained annual cost-to-equity ratios of at least 20 percent.
According to the Complaint, Reda was excessively trading and churning accounts. 21 accounts were supposedly under his control and were exposed to $264,734.00 between fees and commissions. Those accounts which had been funded for at least 12 months had purportedly experienced cost-to-equity ratios ranging from 30 percent to 130 percent and had contained annualized turnover rates ranging between 4.6 and 23.5. For those accounts that had not been funded for a whole year, the annual cost-to-equity ratio ranged between 88 percent and 717 percent. Annualized turnover rates purportedly ranged between 13.4 and 276.7.
According to the Complaint, the strategy that was recommended by Reda was also inappropriate because of at least three customers’ financial needs, risk tolerances and objectives for investing.
The Complaint also alleges that at least 98 trades were effected by Reda without getting authorization from the Spartan Capital Securities customers. In 22 customer accounts, excessive commissions had purportedly been charged by the stockbroker. The stockbroker allegedly delayed executing purchase transactions to get around Spartan Capital Securities’ commission limits.
The Complaint additionally states that Reda did not disclose at least eight customer initiated investment related complaints.
Department of Enforcement alleges that Reda violated Securities Exchange Act of 1934 Section 10(b), Securities and Exchange Commission (SEC) Rule 10b-5, and FINRA Rules 2010, 2111, 2020, 2121 and 1122 as well as FINRA By-Laws.
FINRA Public Disclosure confirms that Reda has been identified in 12 customer initiated investment related disputes regarding allegations of his harmful activities during the time that he was registered with securities broker dealers including Spartan Capital Securities and PHX Financial. Reda is the subject of a customer initiated investment related FINRA securities arbitration claim where the customer was awarded $15,381.44 in damages based on Spartan Capital Securities being found liable on the customer’s claims including churning and unauthorized trading in the customer’s account during the period that Reda was associated with Spartan Capital Securities. FINRA Arbitration No. 18-04117 (June 27, 2019).
On January 28, 2020, another customer filed an investment related FINRA securities arbitration claim regarding Reda’s activities in which the customer sought $72,026.00 in damages supported by accusations of unsuitable investment advice by Reda while registered with Spartan Capital Securities. FINRA Arbitration No. 19-03740 (Jan. 28, 2020). The claim alleges that Reda made misrepresentations resulting in damages.
Reda has been registered with Spartan Capital Securities since May 12, 2016.