FINRA Files New Complaint Against Spartan Capital Securities Over Supervision of High-Risk Brokers

The Financial Industry Regulatory Authority (FINRA) has filed a new disciplinary complaint against Spartan Capital Securities, LLC and several members of its supervisory leadership — Kim M. Monchik (CRD #2528972), Frederick Joseph Cammarano III (CRD #2277307), James Pecoraro (CRD #2440231), John Stapleton (CRD #2791194) and Michael Darvish (CRD #3243141) — alleging systemic failures to supervise high-risk brokers and to respond to repeated red flags involving customer complaints, adverse disclosures and trading activity.

This action is separate from FINRA’s previously filed complaint against Spartan Capital involving Atlas Fund “pre-IPO” private placements. That case alleged failures in due diligence, conflicts, compensation disclosures and oversight of complex products. Instead, the new complaint centers on how Spartan Capital hired, retained, monitored and supervised brokers with extensive disciplinary histories, and whether the firm’s supervisory structure was reasonably designed to protect investors.

Quick Recap of Prior Spartan Capital Issues

This filing follows a series of prior FINRA actions and investor complaints involving Spartan Capital that have addressed issues such as excessive trading, unsuitable recommendations, reporting failures and supervisory deficiencies. Most recently, FINRA brought a separate disciplinary action against Spartan Capital’s leadership over the sale of Atlas Fund private placements marketed as pre-IPO investments, alleging failures related to due diligence, conflicts, compensation disclosures and oversight of complex products.

Those earlier matters largely focused on administrative and product-specific compliance failures, including Form U4 and U5 disclosure issues and private placement supervision. The new complaint represents a shift in focus, placing direct scrutiny on Spartan Capital’s core supervisory framework, particularly its handling of brokers with repeated customer complaints and adverse regulatory histories.

What’s New in This Complaint 

FINRA’s latest disciplinary complaint against Spartan Capital marks a shift away from product-specific issues. Instead, it places the spotlight on the firm’s supervision of high-risk brokers and its internal controls for identifying and responding to warning signs of misconduct.

FINRA Targets Spartan’s Supervision of High-Risk Brokers

According to the complaint, Spartan Capital employed and supervised registered representatives with extensive disciplinary histories, including numerous customer complaints, arbitrations and adverse disclosures. FINRA alleges that despite these histories, the firm failed to implement or enforce meaningful, heightened supervision to address the risks posed by those brokers.

FINRA contends that some representatives were allowed to continue operating even as complaints and disclosures accumulated, raising concerns about whether Spartan Capital adequately evaluated the risks associated with retaining these individuals.

Failure to Investigate Red Flags

The complaint further alleges that Spartan Capital’s supervisory personnel failed to respond appropriately to multiple red flags, including:

• Repeated customer complaints and arbitration filings
• Patterns of trading activity that could indicate excessive trading or unsuitable recommendations
• Adverse disclosure histories that warranted closer scrutiny

FINRA alleges that, rather than escalating or intervening, supervisors allowed problematic activity to continue without meaningful investigation or corrective action.

Inadequate Written Supervisory Procedures 

FINRA also challenges the adequacy of Spartan Capital’s written supervisory procedures (WSPs). According to the complaint, the firm’s procedures were:

• Outdated and not reasonably designed to address the risks presented by high-risk brokers
• Insufficiently tailored to business lines involving heightened misconduct risk
• Lacking clear escalation protocols for brokers with recurring complaints or disciplinary histories

FINRA alleges these deficiencies undermined the firm’s ability to identify, monitor and mitigate misconduct.

Deficient Supervisory Structure Across Branches

The complaint further alleges systemic weaknesses in Spartan Capital’s supervisory structure, including failures at the branch and supervisory level. FINRA claims that:

• Supervisors did not meaningfully review registered representatives’ activity
• Surveillance systems were inadequate to detect problematic trading patterns
• Supervisory responsibilities were assigned without sufficient oversight or accountability
• Branch managers failed to intervene even as patterns of potential misconduct emerged

Leadership Accountability: Monchik, Cammarano, Pecoraro, Stapleton, Darvish

FINRA’s complaint names Monchik, Cammarano III, Pecoraro, Stapleton and Darvish, alleging that each played a role in the supervisory failures described. According to FINRA, the respondents contributed through insufficient reviews, failure to follow up on red flags, inadequate training and a lack of enforcement of heightened supervision plans.

Why This Matters for Investors

FINRA’s allegations in this complaint underscore the role effective supervision plays in protecting investors. When firms fail to closely monitor brokers with significant disciplinary histories, the risk of misconduct, including excessive trading, unsuitable recommendations or unauthorized activity, can increase.

Supervisory systems are designed to identify patterns, escalate concerns and intervene before problems worsen. According to FINRA, the issues raised in this case reflect concerns about whether Spartan Capital’s oversight framework was equipped to detect red flags or respond when warning signs accumulated.

For investors, the allegations highlight the importance of understanding who is managing an account and how closely that activity is being reviewed. Firms that hire or retain brokers with high-risk profiles without implementing meaningful oversight may expose clients to heightened risks, particularly when complaints or adverse disclosures are already present.

Next Steps for Spartan Capital Investors

Investors who worked with Spartan Capital and have concerns about trading activity, account losses or how their accounts were supervised may wish to consider an independent review. In situations involving repeated complaints or warning signs, a closer look at account records can help clarify whether supervisory safeguards functioned as intended.

The Sonn Law Group represents investors nationwide in matters involving brokerage misconduct, supervision failures and FINRA disputes. Our firm works on a contingency-fee basis, meaning you pay nothing unless we recover compensation on your behalf.

To request a confidential consultation, call 833-912-3000 or complete our online consultation form.