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Joseph Kelly of Spartan

by | Aug 26, 2025 | FINRA Allegations

Joseph Kelly is alleged to have ripped up the retirement of his victims.
Joseph Kelly of Spartan Capital is alleged to have destroyed the savings of his investors by excessively trading their accounts.

Josheph Kelly settled charges with regulators alleging that he excessively traded the portfolios of his investors. The Financial Industry Regulatory Authority (FINRA) alleged Kelly made these trades between May 2017 and December 2024. Kelly worked as a representative of Spartan Capital Securities during this timeframe.

FINRA initiated this case in March 2025. It alleged that Kelly exercised de facto control (a requirement no longer necessary for an excessive trading violation) over a number of investor accounts.

With that control, Kelly recommendations “resulted in turnover rates and cost-to-equity ratios that exceeded the traditional guideposts of six and 20 percent, respectively, as well as significant losses. Specifically, Kelly’s recommendations to the customers resulted in turnover rates of 10 to 35 and cost-to-equity ratios of 42% to 171%.” At the same time, Kelly made hundreds of thousands of dollars in commissions from these accounts. This is a violation of Reg BI and FINRA’s suitability rule.

No single test defines when trading is excessive, but factors such as the turnover rate, the cost-to-equity ratio, and the use of in-and-out trading in a customer’s account are relevant to determining whether an associated person has excessively traded a customer’s account in violation of Reg BI. All of these tests can reveal if trading costs benefitted the broker more than the investor.

This is not the first issue facing Kelly concerning his ability to handle the funds of others. His CRD reflects that he was the target of a tax lien in March 2025. Kelly is also the subject of an SEC customer complaint and two large customer suits.

FINRA settlements with brokers do not always return funds to the investors. When the settlements return funds the funds are usually a small percentage of the loss. Investors should speak to a private attorney to explore other options for recovery.

Jeffrey Pederson is an attorney who has successfully represented investors for over 20 years. Call to discuss this or any other broker fraud issue.