Triad Advisors Has Many Different Regulatory Problems
Triad Advisors’ rapid growth has not been without consequences. There have been approximately 7 FINRA, state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA)) for a violation(s) of investment-related rules or regulations. In addition, there have been scores of customer complaints filed against Triad Advisors for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
We have reported and written about these regulatory problems and customer complaints over many years. Triad Advisors is a repeat offender: there are 4 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS TRIAD ADVISORS HAS FACED OVER THE YEARS*
Triad Advisors has been repeatedly censured, warned, ordered to pay disgorgement and restitution, and fined the company over $1 million for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:
FINRA Sanctions Triad Advisors For Numerous Supervisory Lapses
FINRA investigated and found Triad Advisors failed to establish and maintain a reasonable supervisory system to achieve compliance a number of its rules.
First, FINRA found Triad Advisors failed to comply with suitability requirements regarding switching and short-term trading of class A share mutual funds and failed to supervise such trading. As a result of the foregoing, FINRA concluded Triad Advisors violated FINRA Rules 2111, 3110 and 2010.
Additionally, FINRA found Triad Advisors failed to establish, maintain, and enforce a reasonable supervisory system and Written Supervisory Procedures (WSPs) that were reasonably designed to identify possible inappropriate rates of variable annuity exchanges. As a result of the foregoing, FINRA concluded Triad Advisors violated FINRA Rules 2330(d), 3110 and 2010.
Finally, FINRA found Triad Advisors failed to timely file 19 Rule 4530 disclosures in connection with customer-related arbitrations and written customer complaints. In addition, in six instances, Triad Advisors failed to timely update its registered representatives’ Uniform Application for Securities Industry Registration or Transfer Form (Form U4) to disclose reportable events. In ten instances, Triad Advisors failed to timely update Uniform Termination Notice for Securities Industry Registration Form (Form U5) to disclose reportable events. As a result of the foregoing, FINRA concluded Triad Advisors violated FINRA By-Laws, Article V, Sections 2 and 3 and FINRA Rules 4530(a)(1)(G), 4530(d), and 2010.
FINRA sanctioned Triad Advisors for the rule violations by issuing a censure, $175,000 fine, and ordering restitution of $43,998.48 plus interest.
FINRA Sanctions Triad Advisors For UIT Sales Abuses
FINRA investigated and found Triad Advisors failed to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (“UITs”) in violation of FINRA Rule 2010. In addition, Triad Advisors failed to establish, maintain and enforce a supervisory system and adequate written supervisory procedures reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases in violation of NASD Rule 3010 and FINRA Rule 2010.
FINRA concluded, as a result of the foregoing, to impose the following sanctions: Censure; Fine of $175,000; and Restitution to the affected customers in the total amount of$102,631.62, plus interest at the rate set forth in Section 6621(a)(2) of the Internal Revenue Code, 26 U.S.C. 6621(a)(2).
FINRA Sanctions Triad Advisors For False And Misleading Reports
FINRA investigated Triad Advisors and found the broker dealer failed to establish, maintain, and enforce a reasonable supervisory system regarding the use of consolidated reports by its registered representatives. In conducting one of its audits FINRA discovered Triad Advisors allowed its representatives to create and provide consolidated reports to its customers and specifically made a system available to its registered representatives that permitted consolidated reporting and allowed the representatives to enter values for assets and accounts held away from Triad Advisors. However, Triad Advisors did not have an adequate system to supervise the accuracy of valuations provided to the customers, in violation of NASD Conduct Rules 3010(a) and (b) and FINRA Rule 2010. Moreover, Triad’s failure to adequately supervise the consolidated reports and the manual entries of assets resulted in inaccurate statements being sent to certain customers, in violation of NASD Conduct Rules 2210(d)(1) and 2110 and FINRA Rule 2010.
Additionally, FINRA discovered Triad Advisors failed to establish, maintain and enforce a reasonably designed supervisory system and written procedures regarding its examinations of branch offices, in violation of NASD Conduct Rule 3010(c) and FINRA Rule 2010. Triad Advisors further failed to reasonably supervise two former representatives who provided consolidated reports to customers that contained inaccurate and false assets, in violation of NASD Conduct Rule 3010(a) and FINRA Rule 2010. Also, Triad Advisors violated NASD Conduct Rule 3012 and FINRA Rule 2010 in that its supervisory controls report for the year 2010 was deficient, in that it failed to adequately focus on known areas of concern regarding Triad Advisors’ procedures and to detail needed changes or changes that were made to their supervisory policies and procedures.
Furthermore, Triad Advisors conducted a securities business while failing to maintain its required minimum net capital on 10 business days in 2009. Triad further created and maintained inaccurate books and records in that it failed to maintain accurate net capital computations during the period from January 2008 through June 2010. Triad Advisors filed inaccurate FOCUS reports for the period from January 2008 through June 2010. Moreover, Triad Advisors did not promptly file Securities Exchange Act of 1934 (“SEA”) Rule 17a-11 notifications regarding the net capital deficiencies in November and December 2009, as required, all in violation of SEA Sections 15(c)(3) and 17(a), SEA Rules 15c3-1,17a-3, 17a-5(a) and 17a-11, NASD Conduct Rules 3110 and 2110 and FINRA Rule 2010.
Finally, Triad Advisors failed to comply with the requirements of Regulation S-P (17 C.F.R. §248.5) and violated FINRA Rule 2010 in that it failed to send its 2009 privacy policy notice to a group of its customers and failed to enforce its procedures regarding the encryption of electronic messages containing personal confidential information.
FINRA concluded, as a result of the foregoing, to impose the following sanctions: censure; $650,000 fine; and restitution to the customers listed on in the aggregate amount of no less than $375,000.
FINRA Sanctions Triad Advisors For Reporting Deficiencies
As part of its Audit Program, FINRA discovered Triad Advisors failed to report 62 of 100 corporate bond trades within the time period prescribed by NASD Conduct Rule 6230, in violation of NASD Conduct Rules 2110 and 6230. In addition, during this same time period, the firm failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Rule 6230, in violation of NASD Conduct Rules 2110 and 3010. FINRA concluded, as a result of the foregoing, to impose the following sanctions: censure; and $10,000 fine.
*Above are only some of the regulatory disciplinary actions filed against Triad Advisors by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 3 BrokerCheck disclosures.
Did Triad Advisors LLC Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Triad Advisors is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Triad without representation with an attorney about their complaints and have their complaints denied.
Related Read: Can You Sue Your Brokerage Firm?
Consult With An Attorney Who Recovers Investment Losses Caused By Triad Advisors Today
The securities attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 45 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Triad Advisors cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable. Our firm has recovered over $175 million for investors nationwide.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
