FINRA Charges Spartan Capital, CEO and CCO With Fraud Tied to Private Placements and IPO
By Staff
FINRA’s Department of Enforcement has filed a formal complaint against Spartan Capital Securities LLC, its chief executive officer John Dennis Lowry, and its former chief compliance officer Kim Marie Monchik, alleging the three respondents engaged in a scheme to defraud retail customers who had invested in private placements and sought to sell their shares following the company’s initial public offering.
The complaint, filed March 17, 2026, centers on Alzamend Neuro, Inc. (Nasdaq: ALZN), a pharmaceutical company developing Alzheimer’s treatments. Spartan served as placement agent for unregistered private offerings of ALZN in 2017 and 2019, through which the firm received millions of shares of the issuer as compensation. Spartan subsequently underwrote ALZN’s IPO in June 2021.
According to the complaint, when ALZN shares began trading publicly, retail customers who had purchased shares in the 2017 and 2019 private placements wanted to sell. Those shares carried restrictive legends — but FINRA alleges customers had a legitimate and expedited path to selling under Rule 144 and the “deemed owned” exception, which would have allowed them to sell shares short while awaiting removal of the restrictions. Spartan, Lowry, and Monchik allegedly concealed that option from customers entirely.
Instead, FINRA alleges the firm sent customers letters directing them through a lengthy resale process involving seller representation letters, coordination with the company’s transfer agent and counsel, and removal of restrictive legends — a process the firm described as necessary but which FINRA contends was used to delay customer sales while Spartan and selected employees liquidated their own pre-IPO ALZN shares.
The complaint alleges Spartan and certain of its employees generated more than $50 million in profits by selling their own restricted ALZN shares before permitting customers to do the same.
FINRA also alleges Spartan failed to disclose to customers that it and its employees held large positions in ALZN — a material conflict of interest — and that the firm failed to disclose to FINRA the full extent of its underwriting compensation in connection with the ALZN IPO, including $475,000 in cash and 500,000 ALZN shares received under an “uplisting agreement” with the issuer.
The complaint sets out five causes of action: fraud against Spartan, Lowry, and Monchik under Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and FINRA Rules 2020 and 2010; failure to disclose conflicts of interest; undisclosed underwriting compensation in violation of FINRA Rule 5110; and supervisory failures by Spartan in violation of FINRA Rule 3110.
Because the action is a formal complaint rather than a settled letter of acceptance, waiver, and consent, it will proceed to a hearing before FINRA’s Office of Hearing Officers. Respondents have not admitted or denied the allegations.
The March 2026 complaint is the third formal FINRA action to name Lowry and Monchik personally. In a separate complaint filed in October 2021, FINRA charged Spartan, Lowry, and Monchik with 220 instances of failing to timely amend Forms U4 and U5 — documents required to disclose customer complaints and arbitration outcomes. A FINRA hearing panel found the allegations proven in March 2023 and imposed a $600,000 fine on the firm, along with censure and a requirement to retain an independent consultant. In December 2025, FINRA filed an additional complaint alleging that from 2018 through April 2022, Spartan’s business model depended on widespread excessive trading and churning across 114 customer accounts — generating nearly $10 million in trading costs and nearly $8 million in investment losses, with 53 of those accounts belonging to senior customers. Lowry, Monchik, and a branch office manager are named respondents in that action as well.
Separately, FINRA fined Spartan $115,000 in 2024 for repeatedly failing to respond to FINRA document requests between 2021 and 2023, requiring three expedited proceedings to compel compliance.
AltsWire previously reported on a Spartan-connected enforcement action in November 2023, when FINRA suspended a registered representative at the firm for excessive trading in a senior customer’s account in violation of Regulation Best Interest.
Spartan Capital Securities (CRD No. 146251) is a New York-based broker-dealer. Lowry’s CRD number is 4336146. Monchik’s CRD number is 2528972.
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