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Regulators charge Clearwater broker-dealer with securities violations

Margie Manning



Photo by rawpixel on Unsplash

The U.S. Securities and Exchange Commission charged Spartan Securities Group in Clearwater and its principals with 14 counts of securities violations.

They are accused of helping create and sell at least 19 purportedly legitimate public companies that were actually shams, the SEC said in a news release.

Named in the complaint filed in federal court in Tampa on Feb. 20 are Spartan, a broker-dealer; Island Capital Management, a transfer agent that has the same owners as Spartan; and Carl Dilley, Micah Eldred and David Lopez, who were principals of the firms during the time of the alleged violations.

Eldred, who is CEO of Island Capital Management, did not return a call for comment. The company has not filed a response to the complaint in federal court.

According to the complaint, Spartan filed fraudulent applications with the Financial Industry Regulatory Authority, or FINRA, to list the companies’ public stock. Dilley and Eldred signed the false applications, even though they knew the companies were fake and Lopez failed to investigate red flags raised by FINRA, the complaint said.

“Broker-dealers are critical gatekeepers protecting the integrity of our markets, with obligations under our rules to fulfill that role,” Eric I. Bustillo, director of the SEC’s Miami regional office, said in the news release.  “We allege, however, that Spartan Securities and three of its principals failed as gatekeepers by enabling multiple illicit supply chains of undisclosed blank check companies.”

The SEC has been cracking down on schemes to sell blank check companies for the past three years.

A blank check company is a development stage company that has no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with a partner that has not yet been identified, according to the SEC. These companies typically involve speculative investments and often fall within the SEC’s definition of “penny stocks.”

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