Unauthorized Trading with Former Spartan Capital Securities, LLC Broker Marc Reda

Spartan Capital Securities

Spartan Capital Securities

Erez Law is currently investigating former Spartan Capital Securities, LLC broker Marc Reda (CRD# 2757330) regarding unauthorized trading. He was registered with Spartan Capital Securities, LLC in New York, New York from 2016 to 2022. Previously, he was registered with First Standard Financial Company LLC in Staten Island, New York from February to May 2016 and with PHX Financial, Inc. in New York, New York from 2014 to 2016. 

In June 2017, FINRA sanctioned him to pay a $5,000 civil and administrative penalty and fine and suspended him for three months after he, “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.”

In June 2021, he was barred by FINRA after it was found that he had churned 19 customer accounts. According to FINRA, “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.” FINRA found that his investment strategy in the customer accounts was unsuitable and he “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.” Additionally, FINRA found that in the instance of three customers, he made recommendations “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.” FINRA also found that he charged excessive commissions when executing buy transactions in the accounts of 22 customers.

Marc Reda Customer Complaints

Marc Reda has been the subject of 13 customer complaints between 2000 and 2021, two of which were withdrawn, according to his CRD report. The most recent complaints were regarding: 

December 2021. “Time Frame: February 2013 through to Present. Alleged Allegations: Churning, Unsuitability, Breach of Fiduciary Contract, Misrepresentation, Unauthorized Trading, Failure to Supervise” The customer is seeking $83,086.81 in damages and the case is currently pending. The complaint took place while he was registered with Spartan Capital Management LLC and was regarding common and preferred stocks and private placements.

January 2020. “Time Frame: No time frame mentioned/associated with individual claimant in Statement of Claim (SOC). Allegations: Alleging misrepresentation and unsuitable recommendations.” The customer sought $72,026 in damages and the case was settled for $5,700. The complaint took place while he was registered with Spartan Capital Securities, LLC.

December 2018. “Reda was a subject of the customer’s complaint against his member firm that asserted the following causes of action: unauthorized trading and churning.” The customer is seeking $16,020 in damages and the case is currently pending. 

July 2017. “Inappropriate management of [REDACTED] account by his broker at the time, Mr. Reda while charging excessive commissions.” The customer sought $74,232.60 in damages and the case was settled for $45,000. The complaint took place while he was registered with PHX Financial Inc. and was regarding equity OTC and exchange-traded funds (ETFs).

June 2016. “Breach of Fiduciary Duty, Unsuitable recommendations.” The customer sought $100,000 in damages and the case was settled for $26,000. The complaint took place while he was registered with PHX Financial Inc. and was regarding common and preferred stocks.

April 2016. “Client Alleged unauthorized trading and breach of fiduciary duty.” The customer sought $580,000 in damages and the case was settled for $85,000. The complaint took place while he was registered with PHX Financial Inc. and was regarding equity OTC and common and preferred stocks.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Spartan Capital Securities, LLC may be liable for investment or other losses suffered by Marc Reda’s customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.