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Stephen James Sullivan of Garden City, 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 Sullivan based upon allegations that Sullivan failed to provide testimony requested by FINRA in connection with its investigation into his potential churning in customers’ accounts. Department of Enforcement v. Stephen James Sullivan, Disciplinary Action No. 2018056490311 (April 30, 2024).

FINRA’s investigation started in September 2023, focusing on possible excessive trading in customers’ accounts. Sullivan began his testimony on January 9, 2024, but ended the session before FINRA completed its questioning. During his initial testimony, Sullivan refused to answer certain questions and eventually stopped testifying prematurely, despite warnings from FINRA staff about the consequences.

After his lawyer notified FINRA that he no longer represented Sullivan, FINRA sent multiple requests to Sullivan’s addresses to complete the testimony. Sullivan did not comply with these requests.

FINRA alleged that Sullivan’s refusal to cooperate hindered the investigation, preventing FINRA from obtaining necessary information about his trading activities in customer accounts and possible violations of securities laws. Therefore, Department of Enforcement alleged that he violated FINRA Rules 2010 and 8210.

FINRA Public Disclosure shows that Sullivan was fined $10,000.00 and suspended for nine months from associating with any FINRA member in any capacity because Sullivan engaged excessive trading in customer accounts during the time that he was associated with Salomon Whitney LLC. Letter of Acceptance, Waiver, and Consent No. 2020069058101 (October 21, 2022).

Sullivan recommended a pattern of high-cost and high-frequency trading in the customers’ accounts. Sullivan’s customers routinely followed his recommendations and, as a result, he exercised control over the customers’ accounts. Sullivan’s trading caused cost-to-equity ratios ranging from 42.61 percent to 135.11 percent and annualized turnover rates ranging from 12.93 to 30.4. Therefore, the customers suffered collective realized losses of $72,476.00. Those customers collectively paid trading costs of $49,696.00.

FINRA Public Disclosure shows that Sullivan is referenced in four customer initiated investment related disputes concerning Sullivan’s conduct while associated with securities broker dealers. Sullivan was referenced in a customer initiated investment related complaint that was settled on October 10, 2019, for $39,998.00 in damages based upon allegations that Sullivan committed fraud, breach of contract, and breach of fiduciary duty during the time that Sullivan was associated with SW Financial. The claim also alleged that he engaged in excessive, unauthorized, and unsuitable trading in stocks.

On December 2, 2021, a customer initiated investment related FINRA securities arbitration claim involving Sullivan’s conduct was settled for $30,000.00 in damages based upon allegations that Sullivan engaged in unauthorized trading, made unsuitable recommendations, breached a contract, breached his fiduciary duty to the customer, and was negligent in connection with the sale of securities when Sullivan was associated with Newbridge Securities Corporation. FINRA Arbitration No. 21-01811.

Sullivan is also referenced in a customer initiated investment related FINRA securities arbitration claim in which the customer requested $55,883.00 in damages based upon allegations that Sullivan provided unsuitable advice and engaged in unauthorized and excessive trading in over-the-counter equities. FINRA Arbitration No. 22-02586 (March 3, 2023).

Sullivan was associated with Spartan Capital Securities LLC in Garden City, New York from November 1, 2019, to October 5, 2022; SW Financial in Melville, New York from May 8, 2018, to December 2, 2019; and Worden Capital Management LLC in Garden City, New York from November 29, 2017, to May 8, 2018. Since July 18, 2012, Sullivan has been associated with five different broker dealers which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct.