Did You Purchase ATLAS FUNDS through Spartan Capital?

Soreide Law Group has filed a lawsuit on behalf of our client who purchased over $300,000.00 of Atlas Funds through their broker/financial advisor at Spartan Capital Securities LLC.  Soreide Law Group would like to alert all investors who purchased Atlas Funds through Spartan Capital Securities LLC. 

According to a recent FINRA complaint, (Disciplinary Proceeding No. 2021069218305) Spartan Capital Securities LLC made recommendations of securities that had a total principal value of over $24 million to 191 customers, the majority of whom were retail customers, through 16 private placement offerings. According to the complaint, Spartan allegedly lacked a reasonable basis to believe these recommendations were suitable or in the best interests of its customers because it allegedly failed to conduct reasonable due diligence. Spartan generated over $2.4 million in placement fees from these alleged unsuitable recommendations. The complaint states that by failing to have a reasonable basis to recommend these investments, Spartan Capital Securities LLC allegedly violated Regulation Best Interest’s (“BI”) Care Obligation under Rule 15l-1(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), and it violated FINRA Rules 2111 and 2010.

According to the FINRA complaint, John Lowry, Spartan’s CEO and owner, was the sole owner and control person of the issuers of these offerings, which were three unregistered private investment funds (Atlas Funds). John Lowry also was the sole owner and control person of the entity that managed the Atlas Funds. Lowry allegedly approved and managed the offerings on behalf of Atlas Funds, and he determined that Spartan would serve as the exclusive placement agent for the offerings and retain a 10 percent placement fee. Kim Monchik, Spartan’s CCO allegedly assisted the Atlas Funds and Lowry with managing the offerings, and she was allegedly responsible for Spartan’s due diligence on the offerings.

The complaint states that Spartan Capital Securities LLC allegedly disseminated, or caused the dissemination of false and misleading information to investors by sending, or causing others to send investors private placement memoranda and supplements to those PPMs that allegedly contained material misrepresentations about the markups charged to customers, the price the Atlas Funds paid to obtain membership interests in the private investment funds that purportedly held pre-IPO shares, and how Atlas Funds obtained membership interests in pre-IPO shares. According to the complaint, allegedly the supplements falsely stated that Atlas Funds would purchase interests in the pre-IPO shares from a third-party affiliate, Iapetus, LLC at a price that was higher than Iapetus paid for those interests. But the Atlas Funds allegedly did not purchase interests in pre-IPO shares from Iapetus, nor did the Atlas purchase the interests in the pre-IPO shares by paying the markup stated in the supplements. Allegedly, the Atlas Funds purchased the interests directly from the issuer of those interests, and then the Atlas Funds—not Iapetus—allegedly charged a markup on the interests before selling them to investors in the offerings. The Atlas Funds and its manager, at John Lowry’s direction, charged customers $3.25 million in markups, which directly benefitted Lowry who owned and controlled those entities.

Private placements like the Atlas Funds can be high-risk, illiquid, and unsuitable for many retail investors, particularly elderly and retirees. Investors who purchased the Atlas Funds through their broker/dealers and/or financial advisors and suffered significant losses may be entitled to recover their investment through FINRA arbitration.

To discuss this article or any other securities issues, contact Soreide Law Group and speak to an experienced securities lawyer at no cost at:  888-760-6552.

Soreide Law Group represents our clients nationwide before FINRA on a contingency fee basis.