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Regulatory Sanctions

FINRA Dodged a Bullet When It Barred this Broker

March 25, 2019

by Howard Haykin


A well-traveled broker with Spartan Capital Securities had super-sized plans - until he was U5’d for "failure to follow firm policy and procedures." Lucky break for FINRA.



FINRA barred a broker who failed to first notify his member firm in writing that he was engaged in an outside business activity … involving the formation of a new broker-dealer.


Between June 2017 and January 2018, while associated with Spartan Capital, this broker took significant steps to create a broker dealer without notifying the Firm. Specifically, the broker: (i) formed a new business entity; (ii) retained and paid for services of a consultant; (iii) bought office equipment; (iv) rented and paid for his new company's office space; and, (v) solicited and raised capital from a customer at Spartan to fund his new business.


By virtue of the foregoing, the broker violated FINRA Rule 3270, Outside Business Activities of Registered Persons.  

The broker also violated FINRA Rule 8210 when he provided falsified documents and provided false testimony during FINRA's investigation into the circumstances of his termination.  



THE BULLET THAT FINRA DODGED.    Integrity and exposure/indoctrination to strong and purposeful policies and procedures are critical attributes for individuals who are associated with broker-dealers. Those attributes are essential for anyone who seeks to operate his or her own broker-dealer. That's because, in order for a broker-dealer to operate in an ethical and compliant manner, the proper tone must be established at the top of an organization.


While I may not have given the broker in this case enough credit for his 16 years of experience as a registered rep, he didn't exactly earn my respect through his actions.


  • The broker violated FINRA rules regarding outside business activities and cooperation with a FINRA investigation.
  • He was a 'rolling stone' throughout his 16-year career, having been associated with no fewer than 16 broker-dealers.
  • He spent less than a year with 11 of those 16 firms.
  • Six (6) of the broker-dealers were expelled by FINRA and are no longer in business.


Based on this track record, it's hard to imagine that this individual would have been capable of heading up a broker-dealer – let alone operating the business in a compliant and ethical manner. Having barred this broker before he launched his would-be B/D, FINRA may have dodged a future bullet.



This case was reported in FINRA Disciplinary Actions for March 2019.

For further details, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2018057258602.