SEC Says Triad Advisors and Securities America Advisors May Have Charged Clients For Mutual Fund with 12b-1 Fees Even Though There Were Less Costlier Options

According to parent firm Ladenburg Thalmann Financial Services Inc. (LTS), the SEC  is scrutinizing Securities America Advisors Inc., which is the registered investment adviser arm of independent broker-deal Securities America Inc., and Triad Advisors Inc., over allegations that the firms sold mutual funds that charged clients yearly marketing fees when there were less costly options available. These marketing fees are referred to as 12b-1 fees. It is paid to advisors yearly for continuing education and service.

Ladenburg Thalmann’s disclosed news that its firms were under investigation in its quarterly earnings report. In the report, the firm said that SEC staff gave Securities America Holdings and Triad reports in May and August contending that the two firms had “acted inconsistently” regarding their fiduciary duty when recommending and choosing mutual fund share classes that paid these marketing fees. The SEC pointed out that there had been less costly share classes available in the same funds.

Ladenburg Thalmann said that Securities America Advisors and Triad are looking at the SEC’s assessments and they may have to pay restitution to clients.

The SEC has been cracking down on advisers that sell mutual funds that come with 12b-1 marketing fees instead of the less expensive fund options. Already, a number of firms have had to pay fines and repay clients.

Earlier this year, the SEC ordered three independent broker-dealers— FSC Securities Corp., SagePoint Financial Inc., and Royal Alliance Associates Inc.— to collectively pay $2M of restitution to clients for failing to use less expensive mutual funds in their advisory accounts. All three firms used to operate under the AIG Advisor Group umbrella.

If you are an investor who suspects your losses may be because your financial representative charged you unnecessary or excessive fees, chose investments that were unnecessarily costly to you so they could earn earn more in commissions, or for some other reason, such as breach of fiduciary duty, unauthorized trading, misrepresentations and omissions, negligence, or other types of misconduct, contact our securities law firm today.