According to FINRA, Kim Marie Monchik, along with Spartan Capital Securities, LLC and John Dennis Lowry, was named as a respondent in a FINRA complaint alleging willful violations of Regulation Best Interest, dissemination of false and misleading information in violation of the Securities Act of 1933, and supervisory failures.

The complaint alleges that Spartan Capital Securities made recommendations totaling over $24 million to 191 customers through 16 private placement offerings. The firm, through Monchik, allegedly lacked a reasonable basis to believe these recommendations were suitable or in customers' best interests because it failed to conduct reasonable due diligence on the offerings.

Monchik's alleged role was critical to the violations. As the individual responsible for conducting due diligence on behalf of the firm, Monchik allegedly failed to perform reasonable investigations to understand the offerings and reach a reasonable conclusion about whether they were in the best interests of at least some investors. This failure allegedly resulted in unsuitable recommendations to 191 customers, the majority of whom were retail investors.

The complaint also alleges that Monchik, along with the firm and Lowry, recklessly or negligently disseminated false and misleading information to investors in connection with the Atlas Funds offerings. The offering documents allegedly contained material misrepresentations about markups and the source and pricing of investments.

Monchik's role allegedly created significant conflicts of interest that were not properly disclosed. She was responsible for managing the Atlas entities while simultaneously being responsible for conducting due diligence on the offerings on behalf of both the Atlas Funds and Spartan Capital Securities. This dual role created inherent conflicts where Monchik was evaluating offerings for a firm while also managing the entities offering the investments.

The complaint further alleges supervisory failures by Monchik. As the individual responsible for maintaining and updating the firm's written supervisory procedures, Monchik allegedly failed to establish, maintain, and enforce written conflict of interest procedures. The firm allegedly had no written policies or procedures addressing identification, disclosure, or mitigation of conflicts of interest, including conflicts arising from the firm's sale of private placements issued by affiliated entities, Lowry's ownership and control of the firm and the Atlas entities, and Monchik's dual responsibilities.

Additionally, the complaint alleges that the firm and Monchik failed to establish a supervisory system reasonably designed to achieve compliance with Reg BI's Care Obligation as it relates to private placement offerings. The alleged supervisory failures included failing to conduct reasonable due diligence, failing to maintain records reflecting due diligence, and failing to reasonably respond to red flags concerning the private investment funds' ownership of pre-IPO shares.

It is important to note that issuance of a complaint does not represent findings that allegations are true. However, the alleged supervisory failures, if proven, would represent serious breakdowns in the firm's compliance and supervisory systems.