According to FINRA, Spartan Capital Securities, LLC, John Dennis Lowry, and Kim Marie Monchik were sanctioned for failing to amend, or timely amend, Form U4s and Form U5s of registered representatives to disclose customer arbitrations, customer complaints, and reportable financial events. The firm was fined $600,000, Lowry was fined $40,000 and suspended for two years, and Monchik was fined $30,000 and suspended for two years. The respondents appealed the Office of Hearing Officers decision to the NAC.
The firm failed to disclose reportable events involving its registered representatives, including its executive officers Lowry and Monchik. The firm's failures to disclose reportable events involving its executive officers were willful because the firm knowingly and intentionally elected not to disclose customer arbitrations and dispositions of arbitrations by amending their Form U4s.
Lowry willfully failed to amend his Form U4 to disclose, or timely disclose, the filing and disposition of customer arbitrations in which he was a named respondent. The arbitrations resulted in 12 reportable awards and settlements totaling more than $1.6 million. Lowry was a party to all the settlements and awards, with the largest award being $330,000 and the largest settlement being $300,000, both of which he disclosed untimely. Lowry never disclosed eight of the awards and settlements and disclosed four untimely, between 164 and 578 days late.
Similarly, Monchik willfully failed to amend her Form U4 to disclose, or timely disclose, the filing and disposition of customer arbitrations in which she was a named respondent.
Form U4 and U5 disclosures are critical components of the regulatory system that enable investors to research registered representatives' disciplinary history through BrokerCheck. Willful failures to disclose customer complaints, arbitrations, and settlements deprive investors of essential information for evaluating financial professionals. This case involved systematic failures by the firm and its executives to maintain accurate disclosure records.
