By Kenneth Corbin

Regulators have accused a New York City brokerage firm of running a four-year fraud involving excessive trading that produced $46 million in revenue. That amounted to two-thirds of Spartan Capital Securities' overall revenue and two-thirds of its trading revenue from January 2018 through April 2022, according to Finra, the brokerage industry's self-regulatory organization.

Finra alleged that the practice of excessively trading clients' accounts, or churning, was central to Spartan's business model. More than 1,200 accounts Spartan's brokers handled during the period in question had a cost-to-equity ratio of more than 20%, "a threshold that is generally indicative of excessive trading," according to a complaint Finra filed this week.

Spartan didn't immediately respond to a request for comment.

Finra has targeted Spartan for misconduct in the past, including last month, when it brought a complaint alleging the firm had garnered $2.4 million in fees for having clients invest in unsuitable private-placement offerings.

The current complaint details alleged trading activity in 114 accounts -- about 10% of the total accounts involved in the alleged fraud -- that Finra says incurred nearly $10 million in trading costs and $8 million in investment losses. Of the 39 registered representatives who oversaw those accounts, all but one has been barred from the industry by Finra.

Finra says that Spartan routinely charged trading fees through what it called an agency commission or principal markup, as well as a service charge of $75 per trade. Spartan also allegedly collected revenue through margin interest charged to client accounts.

During the period of the alleged misconduct, Finra says Spartan "routinely" hired brokers with histories of customer complaints and regulatory inquiries relating to allegations of excessive or unsuitable trading.

Supervisors at the firm allegedly overlooked "glaring red flags" that suggested excessive trading, including large trading volumes, steep losses, heavy use of margin, and even warning notices from Finra.

"Occasionally, Spartan placed representatives on heightened supervision, " Finra says in its complaint. "But, in practice, Spartan did not stop its representatives from continuing to churn and excessively trade customer accounts."

Finra is asking a panel of hearing officers to require Spartan and the individuals named in its complaint to make restitution to their clients.

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December 18, 2025 14:17 ET (19:17 GMT)

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