FINRA’s complaint alleges that excessive trading in 114 customer accounts generated nearly $10 million in trading costs and almost $8 million in investment losses. Investors who held accounts at Spartan Capital Securities may have potential claims for churning, excessive trading, unsuitable recommendations, or failure to supervise.

The Financial Industry Regulatory Authority filed a disciplinary complaint against Spartan Capital Securities, LLC and several associated individuals on December 15, 2025. The complaint alleges that, between January 1, 2018, and April 30, 2022, Spartan Capital engaged in widespread excessive trading and churning that generated millions of dollars in revenue while causing substantial harm to customers.

The respondents originally named in FINRA Disciplinary Proceeding No. 2018056490335 were:

  • Spartan Capital Securities, LLC
  • Kim M. Monchik
  • Frederick Joseph Cammarano III
  • James Pecoraro
  • John Stapleton
  • Michael Darvish

FINRA’s allegations against the firm and the remaining respondents are pending and have not been proven. In April 2026, Cammarano separately resolved the allegations against him through an Offer of Settlement. He consented to FINRA’s findings without admitting or denying the complaint’s allegations. Those findings apply to Cammarano and are not binding on the other respondents. (FINRA)

FINRA Alleges Nearly $8 Million in Customer Losses

FINRA’s complaint focuses on 114 customer accounts belonging to 110 customers. According to FINRA, the accounts incurred:

  • Nearly $10 million in total trading costs
  • Nearly $8 million in total investment losses
  • Cost-to-equity ratios ranging from approximately 16% to 491%
  • Turnover rates ranging from 5 to 184
  • Frequent short-term and in-and-out trading
  • In some cases, extensive use of margin

FINRA alleges that 53 of the 114 accounts belonged to senior investors who were at least 65 years old when the trading began. Thirty-five of the accounts were allegedly churned, including 20 accounts belonging to senior customers.

The complaint further alleges that 51 of the excessively traded accounts had average holding periods of 30 days or less. According to FINRA, the trading costs imposed on certain accounts made it extremely difficult for those investors to earn a profit. (FINRA)

What Is Churning?

Churning occurs when a broker exercises control over an investor’s account and causes excessive trading primarily to generate commissions, markups, fees, or other compensation.

An investor does not necessarily need to have given the broker formal written discretion for the broker to exercise control. A broker may have de facto control when the customer routinely follows the broker’s recommendations and depends on the broker to decide:

  • Which investments to purchase
  • When to purchase or sell them
  • How many shares to trade
  • How frequently the account should be traded
  • Whether to use margin

FINRA alleges that certain Spartan Capital representatives controlled the volume and frequency of trading in customer accounts. The customers allegedly relied on the representatives’ recommendations and routinely followed them. In some cases, FINRA alleges trades were placed without first consulting the customers. (FINRA)

FINRA Alleges More Than $46 Million in Revenue From High-Cost Accounts

According to FINRA’s allegations, Spartan Capital generated more than $46 million from trading in over 1,200 customer accounts with cost-to-equity ratios above 20% during the relevant period. FINRA describes that amount as approximately two-thirds of the firm’s trading revenue and one-third of its overall revenue.

A cost-to-equity ratio estimates how much an account must appreciate annually simply to cover its trading expenses. For example, an annual cost-to-equity ratio of 30% generally means the account must earn approximately 30% before the investor realizes any net profit.

FINRA alleges that Spartan Capital commonly charged an agency commission or principal markup, as well as a separate $75 service charge per trade. The firm also allegedly earned revenue from interest charged to customer accounts that used margin. (FINRA)

Allegations Involving James Pecoraro

FINRA alleges that James Pecoraro excessively traded eight customer accounts, including four accounts belonging to senior customers. Two senior customers’ accounts were allegedly churned.

According to the complaint, the eight accounts experienced:

  • More than $410,000 in trading costs
  • More than $250,000 in realized losses
  • Cost-to-equity ratios ranging from approximately 53% to 169%
  • Turnover rates ranging from 8 to 22

One example described by FINRA involved a 72-year-old customer. The complaint alleges that 82 trades were effected in the customer’s account between June 2020 and April 2022. The account allegedly incurred more than $50,000 in trading costs and approximately $94,000 in realized losses. (FINRA)

These are allegations in a pending proceeding and have not been established as findings against Pecoraro.

Allegations Involving John Stapleton

FINRA alleges that John Stapleton churned and excessively traded two customer accounts, one of which belonged to a senior investor.

The two accounts allegedly incurred more than:

  • $98,000 in trading costs
  • $175,000 in realized losses

FINRA describes one account belonging to a 68-year-old retired business owner. According to the complaint, 117 trades—often involving margin—were placed in that account between April 2020 and April 2022. FINRA alleges that this trading generated approximately $79,000 in costs and caused approximately $150,000 in realized losses. (FINRA)

These allegations remain pending and have not been proven against Stapleton.

Allegations Involving Michael Darvish

FINRA alleges that Michael Darvish excessively traded four customer accounts, three of which belonged to senior customers.

According to the complaint, those accounts allegedly experienced:

  • More than $565,000 in trading costs
  • More than $390,000 in realized losses
  • Cost-to-equity ratios ranging from 16% to 55%
  • Turnover rates ranging from 7 to 24

One account described in the complaint belonged to an 88-year-old retired investor with a reported low risk tolerance and a balanced investment objective. FINRA alleges that 43 trades were placed in the account between June 2020 and December 2021, generating more than $21,000 in trading costs and over $40,000 in realized losses. (FINRA)

These allegations remain pending and have not been proven against Darvish.

Alleged Supervisory Red Flags at Spartan Capital

Brokerage firms have a duty to establish and maintain systems reasonably designed to supervise their representatives. FINRA alleges that Spartan Capital, Kim Monchik, and Frederick Cammarano failed to investigate or adequately address red flags that included:

  • Large volumes of trading
  • Significant customer losses
  • Cost-to-equity ratios exceeding 20%
  • Turnover rates above six
  • Short-term in-and-out trading
  • Frequent use of margin
  • Customer complaints
  • Representatives appearing repeatedly on exception reports
  • Regulatory inquiries involving potentially excessive trading
  • Representatives experiencing significant financial pressure

Cammarano served in supervisory roles at Spartan Capital, including as the New York City branch manager, regional branch manager, head of retail, and a person responsible for trading supervision. In April 2026, he resolved the allegations against him through an Offer of Settlement, consenting to findings without admitting or denying the allegations. The settlement findings are not binding on Spartan Capital or any other respondent. (FINRA)

Signs That a Spartan Capital Account May Have Been Excessively Traded

Investors may have difficulty identifying churning because account statements can contain hundreds of transactions, and trading expenses are not always presented as one clear total.

Potential warning signs include:

  • Frequent purchases and sales that do not appear connected to a long-term strategy
  • Securities bought and sold within days or weeks
  • The same security repeatedly purchased and sold
  • Numerous unsolicited calls recommending immediate trades
  • Commissions, markups, service charges, and margin interest accumulating rapidly
  • Significant losses despite a rising market
  • The broker making nearly every investment decision
  • Heavy use of margin without a clear investment purpose
  • An account that must generate unusually high returns merely to cover its expenses
  • Retirement savings being actively traded despite conservative objectives
  • Trade confirmations showing markups that were not clearly explained

The number of trades alone does not establish churning. The complete account must be analyzed in relation to its average equity, turnover rate, trading costs, investment objectives, and the degree of control exercised by the broker.

Can Spartan Capital Investors Recover Their Losses?

Customers who suffered losses due to alleged churning or excessive trading may be able to pursue compensation through FINRA arbitration.

Depending on the facts, potential claims may include:

  • Churning
  • Excessive trading
  • Unsuitable investment recommendations
  • Violations of Regulation Best Interest
  • Unauthorized trading
  • Misrepresentation or omission
  • Breach of fiduciary duty
  • Negligence
  • Failure to supervise
  • Breach of contract

A regulatory case brought by FINRA is separate from an individual investor’s claim for compensation. FINRA’s enforcement proceeding does not automatically recover every affected customer’s complete losses.

Investors generally must bring their own arbitration claims to seek damages from a brokerage firm. The amount recoverable will depend on the account history, applicable law, trading activity, losses, fees, prior settlements, and other case-specific circumstances.

Documents Investors Should Preserve

Former and current Spartan Capital customers concerned about excessive trading should preserve:

  • Monthly and quarterly account statements
  • Trade confirmations
  • New account forms
  • Margin agreements
  • Emails and text messages with the broker
  • Written investment recommendations
  • Tax records showing trading gains or losses
  • Notes from telephone conversations
  • Documents describing investment objectives and risk tolerance
  • Records of complaints previously made to Spartan Capital
  • Records of withdrawals, deposits, and account transfers

A securities attorney can use these records to calculate turnover, cost-to-equity ratios, net out-of-pocket losses, market-adjusted damages, commissions, markups, service charges, and margin interest.

Time Limits May Apply

FINRA Rule 12206 generally provides an eligibility period of six years from the occurrence or event giving rise to a claim. Other statutes of limitation may also apply and may be shorter.

Determining the applicable deadline is fact-specific. Investors should not assume that FINRA’s pending regulatory case extends or pauses the deadline for filing an individual arbitration claim.

Speak With a FINRA Arbitration Attorney

Sonn Law Group is investigating potential claims involving Spartan Capital Securities, churning, excessive trading, unsuitable recommendations, margin losses, and alleged supervisory failures.

Investors who maintained accounts at Spartan Capital—particularly between January 2018 and April 2022—should have their account activity reviewed if they experienced frequent trading, substantial commissions, unexplained margin use, or significant investment losses.

Sonn Law Group represents investors in FINRA arbitration claims against brokerage firms and financial professionals. A confidential account review can help determine whether the frequency and cost of trading may support a claim for compensation.

Important Legal Notice

FINRA complaints contain allegations that may be contested. Except for findings arising from Frederick Joseph Cammarano III’s separate Offer of Settlement, the allegations discussed above have not been proven, and the proceeding remains pending against the firm and other respondents. Cammarano consented to findings without admitting or denying the allegations, and those findings are not binding on any other respondent. No reader should interpret the existence of a regulatory complaint as proof of liability.

Past outcomes do not guarantee future results. Every investor claim depends on its individual facts, available evidence, applicable law, and filing deadlines.