Shadi Taysir Barakat (also known as Sean Barakat), of New York, New York, a stockbroker registered with Spartan Capital Securities LLC, is the subject of an enforcement action initiated by Financial Industry Regulatory Authority (FINRA) in which the regulator is seeking sanctions against Barakat based on allegations that Barakat failed to provide testimony during an investigation. Department of Enforcement v. Shadi Taysir Barakat, Disciplinary Proceeding No. 2018056490315 (September 9, 2024).
In investigations, FINRA Rule 8210 allows the regulator to require documents or testimony from stockbrokers associated with FINRA-member securities broker dealers. If someone fails to comply with FINRA’s requests during investigations, it’s considered a violation. This rule helps ensure that FINRA can effectively investigate potential misconduct. Violating this rule also means violating Rule 2010.
In the Complaint, FINRA alleged that Shadi Barakat failed to testify regarding the handling of customer accounts, which might have involved excessive trading or churning. According to the complaint, FINRA contacted Barakat multiple times, requesting his testimony. On May 2, 2024, Barakat reportedly confirmed that his listed address was correct and agreed to provide testimony on June 18, 2024. Barakat allegedly did not appear on the scheduled date or communicate with FINRA to reschedule.
Following this missed testimony, FINRA sent a second request for him to appear on July 11, 2024. Allegedly, Barakat failed to show up and made no effort to reschedule or communicate with FINRA. The regulator claimed that his failure to appear obstructed their investigation into potential wrongdoing, such as excessive trading in customer accounts, which could have harmed investors. Department of Enforcement alleged that Barakat violated FINRA Rules 8210 and 2010 by not cooperating with the regulator.
FINRA Public Disclosure shows that Barakat has been identified in five customer initiated investment related disputes containing allegations of Barakat’s conduct while associated with securities broker dealers. On July 28, 2020, a customer initiated investment related FINRA securities arbitration claim involving Barakat’s conduct was settled for $35,000.00 in damages based upon alleged breach of fiduciary duty, misrepresentations of material fact, negligence, and the unsuitable investment recommendation of leveraged exchange traded notes (ETNs) and exchange traded funds (ETFs) during the time that Barakat was associated with Aegis Capital Corp. FINRA Arbitration No. 15-02850.
On January 27, 2023, a different customer initiated investment related FINRA securities arbitration claim involving Barakat’s conduct was settled for $60,000.00 in damages based upon alleged failure to supervise, breach of fiduciary duty, misrepresentation, and negligence during the time that Barakat was associated with Spartan Capital Securities LLC. FINRA Arbitration No. 22-01203. On April 12, 2023, a customer initiated investment related FINRA securities arbitration claim involving Barakat’s conduct was settled for $29,500.00 in damages based upon alleged unauthorized and unsuitable trading in the customer’s accounts by Barakat.
Barakat was associated with Alexander Capital L.P. in Red Bank, New Jersey, from October 21, 2022, to October 24, 2022. Barakat was associated with Spartan Capital Securities LLC in New York, New York, from May 1, 2017, to October 15, 2022, and with Aegis Capital Corp. in New York, New York, from March 23, 2010, to May 1, 2017.
