Overview
On July 17, 2026, a FINRA arbitration panel ordered Spartan Capital Securities, LLC, along with registered representatives Jesse D. Krapf and Joao Amorim Pinto, to pay a customer approximately $1.9 million to resolve a lawsuit related to investments in a direct participation program. See FINRA Case No. 25-00951. The award included a discovery sanction of $500,000 against Spartan Capital, for withholding documents during the case and submitting a false affirmation regarding its document production. On the same date of the award, Spartan Capital filed a motion to vacate, which is pending.
Common Causes of Action in Lawsuits Involving Direct Participation Programs
Direct participation programs, which include non-traded partnerships and similar illiquid pooled investment vehicles, are complex, commission-heavy, and frequently unsuitable for customers who need liquidity or who are not equipped to evaluate the underlying business risk. As such, lawsuits involving investments in direct participation programs, usually allege that the financial advisor made unsuitable recommendations, churned the account, and made excessive trades. Moreover, under the SEC’s Regulation Best Interest, a broker recommending a direct participation program must have a reasonable basis to believe that the investment, and the frequency of trading in the account, are in the customer’s best interest — not simply a source of recurring commissions for the broker.
When A Firm’s Conduct During The Case Becomes Part Of The Case
As referenced above, Spartan Capital received a discovery sanction of $500,000. Under FINRA Rule 3110, member firms are required to maintain recordkeeping and supervisory systems that make it possible to produce a complete and accurate accounts of customer accounts. When a firm withholds responsive documents and misrepresents the completeness of its production to the arbitrators, it compounds the underlying harm to the customer by making it harder to prove the very misconduct the customer is complaining about — and panels have shown a willingness to punish that conduct as its own separate wrong as shown here.
Impacted Investors
If you held an account with Spartan Capital Securities, LLC, Jesse Krapf, Joao Amorim Pinto, or any brokerage firm or financial advisor and invested in direct participation programs that madeexcessive trades, unauthorized transactions, or had losses, you may have a claim for damages against the firm and its representatives. Belfort Law, PLLC represents investors in FINRA arbitration claims against broker-dealers and their representatives involving these products. Contact our office at (800) 556.3526 or through our website for a free, confidential consultation to discuss your options before time runs out on your claim.