Shepherd Smith Edwards and Kantas Broker Fraud Lawyers

Shepherd Smith Edwards and Kantas Broker Fraud Lawyers are Investigating Spartan Capital Securities For Selling These Alternative Investments

If you are an investor who has sustained losses in any of the 346 private placement investments from one of 16 offerings from Atlas Management LLC, including those involving the following, Shepherd Smith Edwards and Kantas Broker Fraud Lawyers (investorlawyers.com) wants to talk to you:

Atlas Fund III Ser B LLC (Klarna)
Atlas Fund III Ser E LLC (Scopely)
Atlas Fund IV LLC Ser A (Kraken)
Atlas Fund V LLC Ser C (Dataminr)
Atlas Fund V LLC Ser F, F1, & F2 (The Zebra)

The Atlas Fund Management runs and controls the Atlas Funds. The company is owned by John Lowry, who also is Spartan Capital Securities’ CEO.

What Are The Atlas Funds?

Sold through Spartan Capital Securities, which was the exclusive placement agent, the Atlas Funds were supposed to give investors a chance to invest indirectly in pre-IPO companies. In return for investing in a separate series of one of the Atlas Funds, Spartan customers were given a membership interest in that series. Atlas Funds then used investors’ money to buy membership interests in another private investment fund, SP Venture Fund 8, LLC, that purportedly owned shares in pre-IPO companies.

What Are The Allegations Against Spartan Capital Related To The Atlas Funds?

Our investigation comes in the wake of accusations of fraud and a formal disciplinary case filed by the Financial Industry Regulatory Authority (FINRA) accusing Spartan Securities of Regulation Best Interest Violations when it allegedly unsuitably recommended $24M in the Atlas Funds to 191 retail customers. The self-regulatory organization (SRO) is accusing the brokerage firm of issuing private placement memorandums and supplements that purportedly contained false and misleading misstatements, including about markups and the financial interests of parties involved with the funds.

FINRA contends that offering materials makes it seem as if the Funds wouldn’t profit from markups made on transactions. However, some $3.25M in markups were charged, which benefited control persons. Not only that, but Spartan Capital Securities purportedly earned over $2.4M in fees from the transactions.

FINRA maintains that John Lowry set the price that investors would pay for membership interest in the Atlas Fund, including deciding the markup price for the membership interests that were sold to them. For example, the SRO alleges, in one offering, investors paid 12.75% more than the Atlas Funds for their interests in pre-IPO shares.

There was also a 2% management fee and a 20% back-end carried interest fee. This meant that if an investor profited from an offering after a liquidity event for the company that was the focus of the offering, 20% of that would go to Atlas Fund Management. Spartan Capital retained a 10% placement fee.

FINRA is also alleging misrepresentations and omissions, negligence, failure to supervise, due diligence failures, and more.

Did Atlas Fund Investors Know What They Were Getting Involved In?

There are concerns that investors may not have been unaware that they were purchasing membership interests in a certain series of an Atlas Fund tied to one pre-IPO company. StraightPath Fund supposedly held shares in that company.

Questions have arisen as to whether StraightPath actually held the pre-IPO shares to which investors were told they would be receiving indirect exposure. According to FINRA, it wasn’t until March 2021 that Spartan Capital first asked for proof of the holdings and that was after three offerings had already been sold and fully funded. Further follow ups went unanswered, but that purportedly did not stop the brokerage firm from continuing to recommend and sell the Atlas Fund offerings to customers.

How Can Our Broker Fraud Lawyers Help With Your Atlas Fund Losses?

Contact Shepherd Smith Edwards and Kantas today to schedule your free case consultation. We can determine whether you have grounds for an Atlas Fund loss case against Spartan Capital Securities. Our experienced securities law firm has helped thousands of investors to recoup the financial recovery they are owed.

Call our Broker Fraud Lawyers at (800) 259-9010 or fill out this online form.