FINRA Files New Disciplinary Complaint Against Spartan Capital, CEO John Lowry, and CAO Kim Monchik

A new chapter has opened in the ongoing regulatory scrutiny of Spartan Capital Securities. On November 24, 2025, the Financial Industry Regulatory Authority (FINRA) filed Disciplinary Proceeding No. 2021069218305, naming the firm (CRD #146251), its Chief Executive Officer (CEO) John Lowry (CRD #4336146) and its Chief Administrative Officer (CAO) Kim Monchik (CRD #2528972).

The complaint alleges sweeping failures tied to Spartan Capital’s sale of pre-IPO private placements, including unsuitable recommendations, undisclosed conflicts of interest and misleading offering documents. These are allegations only; the case is pending, and no findings have been made.

Prior Spartan Capital Issues

This filing is the latest development in a multi-year series of regulatory actions, customer disputes and supervisory failures involving Spartan Capital and several members of its leadership.

Since 2017, Spartan Capital has been the subject of repeated FINRA actions and investor complaints involving:

• churning and excessive trading
• unsuitable recommendations
• failure to supervise
• inaccurate or untimely Form U4/Form U5 filings
• deficiencies in private placement oversight

Recent prior enforcement matters, including a systemic reporting-failure case and a disclosure-violation complaint against Monchik, focused on issues such as inaccurate regulatory filings, undisclosed arbitration outcomes and inadequate supervision of high-risk products.

This new complaint continues the pattern, but expands FINRA’s allegations to include broader concerns about private placement due diligence, compensation structures and supervisory accountability at the firm’s highest levels.

What’s New in This Case

FINRA’s newest complaint, filed November 24, 2025, adds another layer to the ongoing scrutiny of Spartan Capital Securities, John Lowry and Kim Monchik. It focuses on how Spartan Capital sold a series of private placements marketed as “pre-IPO” exposure.

According to the filing, between March 2021 and October 2021, Spartan Capital reps recommended these Atlas Fund private placements 346 times to 191 mostly retail customers, spanning 16 separate offerings and more than $24 million in total principal, while generating over $2.4 million in placement fees for the firm. The complaint also says additional compensation flowed to entities controlled by Lowry through management fees and undisclosed markups.

FINRA raises three main concerns in this case:

• Due diligence: Spartan Capital and Monchik allegedly approved and sold the offerings without confirming that the underlying funds actually held pre-IPO shares or fully understanding the pricing and markups.
• Conflicts and disclosure: The complaint points to undisclosed markups, Lowry’s control over affiliated issuers and Monchik’s overlapping roles, all of which create conflicts that were not properly addressed under Regulation Best Interest (Reg BI)’s disclosure and conflict-of-interest obligations.
• Supervision: FINRA cites weaknesses in Spartan Capital’s written supervisory procedures and the absence of robust private-placement due diligence standards.

The Offerings and the “Atlas Funds” Structure

FINRA’s complaint describes a layered structure behind the private placements Spartan Capital recommended. At the top were three Atlas Funds (III, IV and V), private investment vehicles controlled by Lowry. Each offering was a separate “series” within an Atlas Fund, and Spartan Capital customers purchased membership interests in those series.

Investor money then flowed from the Atlas Funds into the StraightPath Fund, which purported to hold shares of specific pre-IPO companies. Investors were not buying those companies directly — they were investing through multiple fund layers.

FINRA states that Lowry owned and controlled the Atlas Funds, approved the offerings, set pricing (including markups) and arranged for Spartan to receive a 10% placement fee on every sale. According to the complaint, entities he controlled also collected additional management fees and undisclosed markups.

FINRA further notes that CAO and acting chief compliance officer (CCO) Monchik had operational roles at both Spartan Capital and the Atlas entities. She reportedly handled due diligence, transactions, offering documents and subscription processing while also overseeing Spartan’s supervisory and due diligence processes, creating conflicts of interest that FINRA says were not fully disclosed.

In short, Spartan Capital was recommending and selling private placements issued by affiliated entities that its own leadership controlled, with multiple compensation streams flowing back to those insiders.

Regulation Best Interest Concerns

FINRA’s complaint centers on whether Spartan Capital satisfied its obligations under Reg BI, which requires firms both to understand an investment before recommending it and to disclose material conflicts to customers.

Care Obligation – Alleged Due Diligence Failures

FINRA claims Spartan Capital lacked a reasonable basis to recommend the Atlas private placements because it did not conduct meaningful due diligence. According to the complaint, Spartan Capital:

• Did not confirm that StraightPath Fund actually possessed the pre-IPO shares the Atlas Funds were investing in, even after repeated requests for proof went unanswered.
• Performed only minimal online searches on StraightPath’s manager rather than verifying ownership, structure or financials.
• Did not analyze pricing or markups, leaving the firm unaware of how costs were being layered onto investors.

Because these steps were allegedly missing, FINRA asserts Spartan Capital could not meet Reg BI’s threshold requirement to understand the product’s risks, rewards and costs before recommending it.

Disclosure Obligation – Conflicts and Compensation Not Fully Explained

FINRA also alleges Spartan Capital did not provide full and fair written disclosure of conflicts tied to the offerings. The complaint states:

• Investors were not clearly told that Lowry controlled both Spartan Capital and the Atlas entities and benefited financially from fees and markups.
• Offering documents did not disclose that Monchik simultaneously handled operations at the Atlas entities and oversaw Spartan Capital’s due diligence process.
• The role of affiliated entities receiving compensation or markups was not accurately described.

FINRA alleges these omissions prevented investors from understanding the economic incentives behind the recommendations.

Misrepresentations About Markups and Who Benefited

FINRA’s complaint also focuses on the economics of the offerings, specifically, how much investors were paying and who profited.

Key allegations include:

• Markups totaling about $3.25 million were charged to customers across 15 of the 16 offerings, ranging from 12.75% to 36.4%.
• Offering documents allegedly misstated how the Atlas Funds acquired the pre-IPO interests and created the impression that a third-party affiliate (Iapetus, LLC) purchased the shares first and earned the markup.
• FINRA claims this was not true. According to the complaint, the Atlas Funds purchased shares directly from the issuer and then applied the markup themselves, which financially benefited entities controlled by Lowry.

For investors, these allegations matter because markups in illiquid, high-risk private placements directly affect returns. Undisclosed or inaccurately described markups can obscure the real cost of the investment.

Supervision and Written Supervisory Procedures

FINRA also challenges Spartan Capital’s overall supervisory framework, alleging that the firm’s written supervisory procedures (WSPs) were not adequate for overseeing private placements of this complexity. According to the complaint, Spartan Capital’s WSPs offered little concrete guidance on how due diligence should be conducted, documented or approved for these types of offerings.

FINRA further states that Spartan Capital lacked a clear process for identifying, reviewing or mitigating conflicts of interest tied to affiliated issuers, even as firm insiders stood to benefit from fees and markups. The complaint also alleges that Spartan Capital did not maintain records documenting the due diligence steps taken, despite having written procedures that required such documentation.

As acting CCO, Monchik was responsible for supervising the offerings, but FINRA claims she did so without procedures reasonably designed to ensure compliance with Reg BI. Taken together, FINRA asserts that these systemic weaknesses in supervision and WSPs contributed to the firm’s inability to spot red flags or prevent the issues outlined in the complaint.

What Investors Should Know

For investors, FINRA’s new complaint against Spartan Capital is less about technical rule citations and more about spotting red flags in how complex private placements were recommended. Private placements pitched as “pre-IPO” exposure often involve layered fund structures, limited liquidity and limited transparency, which means that fees, markups and insider compensation can have an outsized impact on your eventual returns.

Reg BI is meant to ensure that any recommendation is in a retail customer’s best interest and that material conflicts of interest are fully and fairly disclosed in writing. While this case is still at the allegation stage and no findings have been made, claims involving weak due diligence, undisclosed compensation and gaps in supervision are a meaningful signal for investors to take a closer look.

If you invested in Atlas Funds or other private placements through Spartan Capital, it may be helpful to gather your paperwork, including private placement memoranda (PPMs), supplements, subscription documents, account statements and written communications (emails or texts) so those materials can be reviewed in light of the issues FINRA has raised.

Next Steps for Affected Spartan Investors

If you invested in Spartan Capital’s private placements or “pre-IPO” offerings and now have questions about fees, markups, disclosures or account losses, you may have avenues for recovery through FINRA arbitration. These allegations remain unproven, but they raise issues that are important for investors to evaluate sooner rather than later.

The Sonn Law Group represents investors nationwide in disputes involving private placements, conflicts of interest and supervisory failures. Our firm works on a contingency fee basis — you pay nothing unless we recover compensation for you. 

To discuss your situation in a confidential consultation, call 833-912-3000 or complete our online contact form.