FINRA Sanctions Triad Advisors, LLC for Violating Rules on Supervision of Advisors
After completing an investigation into allegations of improper securities trades at Triad Advisors, LLC, the Financial Industry Regulatory Authority (FINRA) sanctioned the company for failing to supervise its advisors, as member firms are required to do. The member firm has been part of FINRA for more than 30 years and is based in Atlanta, GA.
The letter of acceptance, waiver, and consent against Triad was accepted by FINRA on February 9, 2021. According to publicly available FINRA documents:
● “From June 3, 2015, through July 31, 2017, Triad failed to establish and maintain a reasonable supervisory system to achieve compliance 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, Triad violated FINRA Rules $###” 3110 and 2010.”
● “Additionally, from June 2015 through December 2017, Triad failed to establish, maintain, and enforce a reasonable supervisory system and Written Supervisory Procedures (WSPs) that were reasonably designed to identify possible inappropriate rates 2 of VA exchanges. As a result of the foregoing, Triad violated FINRA Rules 2330(d), 3110 and 2010.”
● “Finally, from June 2015 through December 2017, Triad failed to timely file 19 Rule 4530 disclosures in connection with customer-related arbitrations and written customer complaints. In addition, in six instances, Triad 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 failed to timely update Uniform Termination Notice for Securities Industry Registration Form (Form U5) to disclose reportable events. As a result of the foregoing, Triad violated FINRA ByLaws, Article V, Sections 2 and 3 and FINRA Rules 4530(a)(1)(G), 4530(d), and 2010.”
While the suitability requirement under FINRA Rule 2111 is, of course, vital to a strong securities industry, Triad also suffered consequences here for violating Rule 3110, which outlines the requirements for member firms supervising their employees. Among the requirements is a written system of supervision designed to provide oversight for the activities of member firm advisors. Supervision is intended to ensure that the work of investment advisors complies with not just securities laws but FINRA regulations, too, with the ultimate goal of protecting clients from illegal or unethical practices.
Triad received four customer complaints during the period investigated, according to the FINRA sanction, and they all focused on the work of one investment advisor. The complaints had a common theme—that the broker borrowed from clients outside the approved activities of the firm, a violation of company and regulatory policy. The company settled the customer complaints but delayed filling the appropriate disclosure notification paperwork with FINRA for hundreds of days.
As a result, Triad was formally censured by FINRA. The company was also fined $150,000 and required to pay more than $43,000 in restitution to affected customers. Repayments to customers must be completed within a strict time frame, and specific forms of proof are required. In addition, Triad may still be subject to lawsuits filed by investors who were impacted by the misconduct.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.