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FINRA Accuses Spartan Capital of Widespread Churning That Allegedly Harmed Customers

Posted on February 3rd, 2026 at 1:42 PM
FINRA Accuses Spartan Capital of Widespread Churning That Allegedly Harmed Customers

From the desk of Jim Eccleston at Ä¢¹½´«Ã½

The Financial Industry Regulatory Authority (FINRA) has brought a disciplinary complaint against Spartan Capital Securities and several senior leaders of the New York City–based broker-dealer, alleging that the firm facilitated excessive trading that generated millions of dollars in revenue while causing substantial losses to customers.

According to FINRA’s complaint, 114 customer accounts incurred nearly $10 million in trading costs and suffered close to $8 million in investment losses due to excessive trading activity. According to AdvisorHub, FINRA reported that 53 of those accounts belonged to senior customers. The alleged misconduct occurred over four years, 6from January 2018 through April 2022.

FINRA alleged that the trading activity produced extreme cost-to-equity ratios, with some accounts reaching as high as 491 percent. The regulator noted that approximately one-third of Spartan’s total revenue came from customer accounts with cost-to-equity ratios exceeding 20 percent, a benchmark FINRA often cites as an indicator of potentially excessive trading, as reported by AdvisorHub.

In its filing, FINRA accused Spartan of allowing its brokers to churn customer accounts despite what it described as clear warning signs. According to AdvisorHub, FINRA asserted that the firm ignored red flags indicating that representatives were engaging in misconduct and harming customers, and that Spartan’s overall business model relied on this activity.

The complaint names five Spartan brokers and executives as respondents. FINRA also alleged that an additional 36 Spartan representatives, who were not named as respondents, failed to take meaningful supervisory steps to prevent or stop the excessive trading, according to AdvisorHub.

 

Ä¢¹½´«Ã½ LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra, spartan capital

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