Three former registered reps have been suspended for excessive and unsuitable trades while at Spartan Capital Securities of Garden City, N.Y.—transactions that cost clients millions in fees and trading losses, according to disciplinary letters released this week by the Financial Industry Regulatory Authority.
All three individuals agreed to the suspensions as part of consent agreements, the regulator said.
Finra said the reps were in violation of Regulation Best Interest, a set of rules adopted by the Securities and Exchange Commission in 2020 that require broker-dealers to act in clients' best interest when doling out investment advice.
For the 13 clients affected, the reps' trading resulted in about $3.1 million in trading costs, including commissions, and $2.8 million in investment losses, according to Finra.
The clients included a mix of retirees and working people, including a 67-year-old semiretired business owner who lost $313,220, a 69-year-old physician who lost $326,684 and a 78-year-old retiree who lost $123,622, according to Finra.
The reps are no longer registered or affiliated with Spartan or any other Finra member firm, the regulator said.
A Spartan Capital spokesperson said the firm had no comment and referred questions to the firm's attorney. The attorney did not immediately respond to a request for comment.
In determining whether trades are excessive, Finra says it looks at the turnover rate of a portfolio and its cost-to-equity ratio, which measures the amount an account must appreciate just to cover commissions and other expenses.
"A turnover rate of six or more, or a cost-to-equity ratio above 20%, generally indicates that a series of recommended transactions was excessive," Finra said.
The following formerly registered brokers were suspended:
• Kyle Infinite Manning was suspended for 17 months for trades that happened between February 2016 and April 2022, Finra said.
"Manning’s trading resulted in high turnover rates and cost-to-equity ratios that were well above the traditional guideposts of six and 20%, respectively," Finra said in the agreement
For the three clients, who ranged in age from 62 to 81, the trades resulted in $1.6 million in trading costs and $1.1 million in investment losses, Finra said.
• George Apolonides, also known as George Apollo, was suspended for 11 months for trades conducted between March 2016 and April 2022.
Apolonides’s trading in four customer accounts resulted in annualized turnover rates of 17 to 38 and annualized cost-to-equity ratios of 71% to 125%, Finra said, while generating trading costs of $618,911, including $563,263 in commissions, and causing $735,376 in losses
• Kostas Tsamos, also known as Gus Tsamos, was suspended for 17 months for trades conducted between February 2016 and April 2022.
Tsamos’s trading in the six customer accounts resulted in annualized turnover rates of 10 to 21 and annualized cost-to-equity ratios of 38% to 82%, Finra said, while generating trading costs of $958,948, including $849,576 in commissions, and causing more than $1.03 million in losses.
Under the terms of the settlement, the reps consented to the release of Finra's findings without admitting to or denying the accusations.