A New York City broker has been administratively charged with a variety of activities that cost his clients nearly $2 million in excess fees and in lost investments, the Financial Industry Regulatory Authority announced today.
Marc Augustus Reda, a registered representative for Spartan Capital Securities in New York City who has been the subjective of multiple client complaints during his 20-year career, is being accused of churning accounts, misrepresenting his activities and making trades without his clients’ permission, Finra said. The regulatory authority said it is seeking the return of Reda's ill-gotten gains.
From 2017 through 2019, Reda, among other things, recommended unsuitable investments to his clients and traded excessively in those accounts, the complaint said. His activities resulted in 66 clients paying a total of $952,764 in commissions and fees, while incurring total net losses of $934,482, Finra said.
Reda failed to consider that the substantial commissions and costs associated with his investment strategy made it unlikely his customers could make any profits, Finra said.
“The active trading strategy he recommended to customers resulted in customers paying Reda and Spartan Capital substantial commissions and fees and caused his customers to almost always lose money,” the complaint said. “Indeed, aggregate customer losses closely mirrored aggregate commissions and fees paid to Reda and Spartan Capital.”
Reda executed 10 or more trades in the accounts of 66 customers in the three years to generate the fees, Finra said. The accounts had an average of nearly $2.5 million in assets each.
Finra added that Reda did not conduct due diligence on the trades and did not consider how the costs associated with his active trading strategy would affect the performance of his customers’ accounts. The accounts were mostly concentrated in only one or two positions at any time.
Reda took a variety of actions on different customers and their accounts. For instance, Finra said in one case he recommended to three clients individual securities transactions that were speculative in nature and not suitable for investors with a balanced growth or growth investment objective.
Reda had a spotted career even before he became associated with Spartan Capital Securities, the complaint said. He was associated with 18 firms since 1999 and was discharged from at least two of them. He filed for bankruptcy in 2017. Finra also said he failed to disclose customer complaints and federal and state tax liens filed against him to Finra.