Marc Augustus Reda, Broker with Spartan Capital Securities, Named in FINRA Complaint Alleging Churning in Customer Accounts

The complaint also alleges that Reda made unauthorized trades in customers’ accounts.

Marc Augustus Reda (CRD#: 2757330) is registered as a broker with Spartan Capital Securities, where he has been employed since 2016. Previously, Reda was registered as a broker with First Standard Financial Company in 2016.

Reda has 19 disclosures on his BrokerCheck report. Two customer disputes filed against Reda were withdrawn.

June 2021 Regulatory Judgment

• Initiated By: FINRA
• Allegations: Reda was named a respondent in a FINRA complaint alleging that he willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 and violated FINRA Rule 2020 by churning in customer accounts. The complaint alleges that Reda exercised de facto control of the trading in, and made the trading decisions for, 19 customers’ accounts. The customers relied on Reda to make securities recommendations and consistently followed his recommendations. Reda also exercised control in instances when he made unauthorized transactions in the customer accounts. The complaint also alleges that Reda recommended securities transactions in the customers’ accounts that were excessive and quantitatively unsuitable for each of the customers in light of their investment profiles. In excessively trading the customers’ accounts, Reda maximized his own financial benefit at the expense of his customers, generating costs of $264,734 and causing realized losses of $232,043 on accounts with an aggregate average monthly account value of $262,234. While the investment profiles of the customers varied, none of the customers agreed to trade in such a way that would deplete their accounts with little hope of making a profit, while also enriching Reda. The complaint further alleges that Reda had no reasonable basis to believe that the investment strategy he recommended to his customers was, in light of the cumulative costs, suitable. Reda recommended his costly active trading strategy to his customers without understanding the potential risks and rewards, failed to consider the effect of the strategy’s costs on his customers’ ability to generate a profit and did not conduct any research or analysis, or seek any guidance, on whether his strategy could be profitable given the cumulative costs incurred through the implementation of his strategy. Reda did not understand what cost-to-equity ratios and turnover rates were and consequently failed to consider and calculate these metrics when recommending and executing his active trading investment strategy in his customers’ accounts. In addition, the complaint alleges that although Reda had an obligation to know his customers prior to recommending a securities transaction or strategy to them, he recommended both a speculative investment strategy and, to implement that strategy, recommended speculative securities transactions to three customers without a reasonable basis to believe the recommended strategy and individual securities transactions were suitable for those customers based on their investment profiles, including their investment objectives of balanced growth or growth. As it relates to the three customers, Reda was unaware of their investment objectives, risk tolerances, and other information identified in their new account forms prior to making his recommendations to them. Moreover, the complaint alleges that Reda executed transactions in six customers’ nondiscretionary accounts without their prior authorization or consent. Furthermore, the complaint alleges that when executing buy transactions in 22 customers’ accounts using the proceeds of sale transactions three days earlier, Reda charged excessive commissions. Reda intentionally waited three days to execute the buy transactions to circumvent his member firm’s supervisory review of commissions of more than five percent on proceeds transactions. The commissions Reda charged were excessive, unfair, and unreasonable taking into consideration all relevant circumstances, including that he did not disclose to his customers, prior to effecting the transactions, that he would charge such high commissions. The complaint alleges that Reda willfully failed to disclose customer complaints alleging sales practice violations on his Uniform Application for Securities Industry Registration or Transfer (Form U4) and also willfully failed to timely amend his Form U4 to disclose an unsatisfied tax lien and an unsatisfied tax warrant.

January 2020 Customer Dispute

• Status: Pending
• Allegations: Time Frame: No time frame mentioned/associated with individual claimant in Statement of Claim (SOC). Allegations: Alleging misrepresentation and unsuitable recommendations
• Damage Amount Requested: $72,026.00
• Broker Comment: The Claims were filed by Cold Spring Advisory – Non-Attorney Representatives (NARS). NARS have no ethical code or constraints like attorneys do, and do not face potential sanctions from any regulatory or licensing body like a state bar association. Essentially, this system exposes the investor potential victimization, with little chance of recovering damages caused by an unscrupulous or negligent NAR.” The NARs are specifically attuned to the FINRA guidance and have weaponized the FINRA reporting requirements against individuals such as applicant, by making totally baseless, unfounded, unsupportable, and factually false allegations against them and are being permitted to do so with no regard for the investor or the applicant.

December 2018 Customer Dispute

• Status: Award / Judgment
• Allegations: Reda was a subject of the customer’s complaint against his member firm that asserted the following causes of action: unauthorized trading and churning.
• Damage Amount Requested: $16,020.00
• Broker Comment: Rep strongly denies these allegations. Customer was an active and knowledgeable participant in the decision making and authorized each and every transaction in account.

December 2017 Financial Judgment

• Status: Pending
• Type: Bankruptcy

July 2017 Customer Dispute

• Status: Settled
• Allegations: Inappropriate management of [REDACTED] account by his broker at the time, Mr. Reda while charging excessive commissions.
• Damage Amount Requested: $74,232.60
• Settlement Amount: $45,000.00
• Broker Comment: Mr. Reda left PHX in January 2016. 20 months after leaving PHX the customer filed the alleged complaint. Mr. Reda was never notified about the complaint by PHX. Mr. Reda denies any and all allegations of the complaint.

June 2017 Regulatory Judgment

• Initiated By: FINRA
• Allegations: Without admitting or denying the findings, Reda consented to the sanctions and to the entry of findings that he exercised discretion in customers’ accounts without written authorization from the customers and without having obtained his member firm’s approval to treat those accounts as discretionary. The findings stated that Reda failed to timely disclose on his Form U4 a federal tax lien filed against him in the amount of $575,101.
• Resolution: Acceptance, Waiver & Consent (AWC)
• Sanctions: Civil and Administrative Penalty(ies)/Fine(s)
• Amount: $5,000.00
• Sanctions: Suspension
• Registration Capacities Affected: All capacities 
• Duration: three months
• Start Date: 7/3/2017
• End Date: 10/2/2017
• Regulator Statement: Fines paid in full on December 21, 2017.
• Broker Statement: Applicant accepted the AWC in order to avoid costly legal fees. All trades were authorized and the U4 filing was completed shortly after being fully aware of the lien.

June 2016 Customer Dispute

• Status: Settled
• Allegations: Breach of Fiduciary Duty, Unsuitable recommendations
• Damage Amount Requested: $100,000.00
• Settlement Amount: $26,000.00
• Broker Comment: On Sept 19 2016 FINRA notified Mr. Reda the claimant dismissed Mr. Reda with prejudice in the matter and Mr. Reda has been removed as an active party to this arbitration.

April 2016 Customer Dispute

• Status: Settled
• Allegations: Client Alleged unauthorized trading and breach of fiduciary duty.
• Damage Amount Requested: $580,000.00
• Settlement Amount: $85,000.00

March 2016 Customer Dispute

• Status: Settled
• Allegations: Client alleged that his broker did not place two stop loss orders as agreed on 10/08/2015 resulting in losses. 
• Damage Amount Requested: $31,250.00
• Settlement Amount: $14,800.00

March 2016 Customer Dispute

• Status: Settled
• Allegations: Client stated in an email forwarded to compliance that beginning in November of 2015, there was failure by his broker to follow instructions, unauthorized trades, poor communication and over concentration of investments in his accounts.
• Settlement Amount: $112,500.00

January 2016 Employment Separation After Allegations

• Firm Name: PHX Financial, Inc.
• Termination Type: Permitted to Resign
• Allegations: Violation of firm cell phone policy.

January 2016 Customer Dispute

• Status: Settled
• Allegations: Client contacted the firm and stated to the firm that certain transactions executed shortly after opening her account on April 30th of 2015 were unauthorized.
• Damage Amount Requested: $400,000.00
• Settlement Amount: $120,000.00

November 2011 Judgment / Lien

• Judgment/Lien Amount: $575,101.40
• Judgment/Lien Type: Tax
• Broker Comment: My accountant is in the final stages of reaching a compromise with the IRS which would resolve this debt.

March 2004 Customer Dispute

• Status: Settled
• Allegations: Customer claims unauthorized sale of Penn Octane shares.
• Damage Amount Requested: $14,000.00
• Settlement Amount: $14,000.00
• Broker Comment: This filing by Clarke Street Capital is an error! I have never had this individual/company as a client. I have never bought or sold shares in Penn Octane for any client in my entire career. I was never contacted by anyone from Clark Street Capital with respect to this matter. All of the allegations are false, and unfounded.

October 2011 Employment Separation After Allegations

• Firm Name: InvestPrivate
• Termination Type: Voluntary Resignation
• Allegations: Customer said he had a standing order to sell to limit loss. Cust. complaint was denied by firm.
• Broker Comment: I was never terminated. I voluntarily resigned and was never informed of any allegation or complaint pertaining to the filing of this outrageous amendment. There was never an allegation or complaint while employed with InvestPrivate. I intend to follow up & remove such allegations.

January 2000 Customer Dispute

• Status: Settled
• Allegations: The client alleged that Mr. Reda sold a security in his account and purchased another security without authorization. The following day [customer] wrote a letter rescinding his complaint against Mr. Reda on February 1, 2000.
• Damage Amount Requested: $13,487.31
• Settlement Amount: $13,487.31
• Broker Comment: There was never a customer complaint filed by [customer]. This complaint was clearly a misunderstanding. [Customer] had written a letter stating the fact that there was no unauthorized trade that had taken place. All allegations are false. Dalton Kent is out of business therefore expungement of this matter will be pursued through civil court.

Contact Us Today

The Sonn Law Group is currently investigating allegations surrounding Marc Augustus Reda. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.