Advisor Group broker-dealer Triad Advisors agreed to pay nearly $200,000 in fines and restitution to customers to settle charges that the firm failed in its supervisory responsibilities to monitor short-term and unsuitable switching of A-share mutual funds and Variable Annuity exchanges, and for failing to make timely disclosure filings such as indicating to FINRA of customer complaints against a broker.
According to AWC #2017052330501, Triad Advisors from 2015 through 2017 failed to establish and maintain a reasonable supervisory system pertaining to switching and short-term trading of Class-A share mutual funds. FINRA also found that Triad Advisors failed to establish, maintain, and enforce a reasonable supervisory system for variable annuity exchanges, and failed to timely disclose customer-related arbitrations and complaints, including a failure to update personnel files that would include such reportable events in an individual broker or investment adviser's BrokerCheck file.
FINRA found that when a Triad stockbroker engaged in short-term, unsuitable purchases and sales and switching of A-share mutual funds in 10 customer accounts, this misconduct resulted in customer losses of nearly $44,000. The report states that the customers all indicated investment objectives and intermediate-to-long-term time horizons that conflicted with the short-term trading activity.
Investigators specifically found that Triad's supervisory team failed to follow up on red flags contained within switch letters and approved many of the transactions before actually receiving a switch letter from their customers; furthermore, the letters appeared to have been completed in the registered representative's "distinct handwriting." Some were incomplete and others contained inaccurate information, which the firm failed to detect and/or appropriately act on.
Similarly, Triad purportedly failed to reasonably supervise its VA exchange business and was unable to detect potentially inappropriate rates of exchange. According to FINRA, the firm also failed to make timely disclosure filings as required, including customer complaints filed against Triad representatives, and, specifically, failed to timely disclose at least 15 customer-related arbitrations that resulted in settlements greater than $25,000.
At the time of Triad Advisors' purported misconduct, the firm was part of the Ladenburgh Thamann Financial Services network of independent broker-dealers. In 2018, the SEC charged Ladenburgh Thalmann chairman Phillip Frost and several other co-defendants with perpetrating several fraudulent pump-and-dump schemes involving penny stocks that resulted in illicit profits of several millions of dollars.
If you have invested with Triad Advisors or with any broker, financial adviser, or brokerage firm whose failure to supervise transactions or whose unsuitable recommendations have proven harmful to your investments or interests through excessive mutual fund switches, variable annuity exchanges, or other inappropriate trades or transactions that were unsuitable given your investment objectives and risk tolerances preferences, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.