Settlement in FINRA Case Involves Repaying Nearly $44K to Affected Customers
The Financial Industry Regulatory Authority (FINRA) has ordered Triad Advisors to pay a $150K fine for not adequately supervising both short-term trades involving Class A shares of mutual funds and variable annuity exchanges. The self-regulatory organization (SRO) also accused the Atlanta-headquartered broker-dealer of not making timely disclosures involving customer complaints and arbitration.
Triad Advisors, which is an Advisor Group network brokerage firm, consented to repay clients that were affected nearly $44k as part of its settlement for this case. It is not, however, denying or admitting to FINRA’s findings.
Our broker-dealer fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) have been investigating customer complaints against Triad Advisors for some time. We’ve recently filed FINRA arbitration claims against the firm on behalf of investors seeking to recover losses in the alleged $1.7B GPB Ponzi Scam. Triad Advisors is one of the dozens of firms that earned high commissions from selling GPB Capital Holdings’ private placements to clients.
Mutual Fund Switching Involving Short-Term Trades Led To Additional Fees
FINRA said that Triad Advisors’ supervisory failures took place between the middle of June 2015 through sometime during the latter half of 2017. This was before Advisor Group merged with Ladenburg Thalmann Financial Services, which was Triad Advisors’ former owner, in 2020.
Mutual fund Class A shares usually charge a sales fee upfront, including commissions, and should be held for long periods.
Mutual fund switching happens when a customer sells the current mutual fund shares they are holding and places the proceeds into another mutual fund. The switch leads to them having to again pay a front-end load sales charge.
Buying and selling and switching Class A Share mutual funds too often can be unsuitable especially in light of these costs, which can add up especially if such switches happen often.
The SRO contends that the brokerage firm did not set up and keep up a reasonable supervisory system that could have allowed it to comply with the suitability requirements pertaining to short-term trading and mutual fund Class A share switching.
As a result, FINRA found that a Triad Advisors broker engaged in the short-term buying, selling, and switching of Class A shares in 10 customer accounts.
All of these accounts had the same goals of preserving and growing capital and/or earning income. They sought long-term or intermediate horizons. Instead, they ended up holding Class A share mutual fund positions for a year or less. This led to losses of nearly $44k in 9 of these accounts.
Broker-Dealer Was Late in Disclosing Arbitration and Customer Complaints
Triad Advisors is accused of not reporting disclosures involving customer complaints and arbitrations in a timely manner. This includes being over 600 days late in reporting that 15 customer arbitrations had resulted in settlements of $25K or more.
The broker-dealer also was purportedly about 232 days late, rather than disclosing in a timely manner, that four customer complaints had named one Triad Advisors broker. The firm settled these complaints.
Also, FINRA found that Triad Advisors did not have a system in place to properly monitor the patterns of variable annuity exchanges and that could have allowed it to detect when its brokers were engaging in variable annuity exchanges at high rates.
Experienced Brokerage Firm Negligence Lawyers
If you suffered losses while working with a Triad Advisors broker, please contact SSEK Law Firm using our online form or by calling (800) 259-9010 today. For over 30 years, we’ve helped thousands of investors to recoup the investment losses they suffered due to broker fraud and negligence from the firms and their registered representatives responsible.