Allegation’s Seriousness, Case Information, and Impact on Investors
Triad Advisors LLC, a reputable Atlanta-based financial advisory firm, has faced a series of allegations and regulatory events that have seriously affected its reputation among investors and regulators alike. This company, a part of the Advisor Group broker-dealer network, has recently rebranded as “Osaic Wealth,” likely due to a total of 13 disclosure events on its broker record, according to its CRD or FINRA BrokerCheck report.
The regulatory history contains eight regulatory events and five arbitrations. Particularly noteworthy offences include supervisory failures over recommendations of high-risk investments, such as the infamous LJM Preservation and Growth Fund, which led to client losses of hundreds of thousands. Other significant offences involve switching and short-term trading of class A share mutual funds.
Sadly, as Warren Buffet once said, “It takes 20 years to build a reputation and five minutes to ruin it”. These actions have not only cast a shadow over the company’s reputation but have inflicted financial harm to its clients – you, the investors, the ones who placed trust in their expertise.
Financial Advisor’s Background, Broker Dealer and Past Complaints
Triad Advisors, CRD# 25803 was established as a distinguished financial advisory firm before these unsettling events. As part of a group of eight broker-dealers, this firm has always strived to provide blue-ribbon quality service in the finance sector.
- January 2022: FINRA censured and fined Triad Advisors $195,000 for supervisory failures linked to high-risk LJM funds.
- February 2021: FINRA censured Triad Advisors and imposed a fine of $150,000 over supervisory failures concerning switching and short-term trading of class A share mutual funds.
This unfortunate string of misconduct wound up with unresolved lawsuits and embroiled the investors who suffered significant losses. It’s instances like these that have ultimately led to the firm’s rebranding to Osaic Wealth.
FINRA Rule in Simple Terms
FINRA’s Supervision Rule, in a nutshell, mandates every broker-dealer to apply adequate control over their advisors, ensuring there are procedures and systems to detect misconduct. When an advisor fails to comply with securities laws, such as making unsuitable investments, the broker-dealer they’re with may be held liable for investment losses through FINRA Arbitration.
Let’s think of this as the measures of quality assurance for an automobile manufacturing plant. Just as every car must meet certain safety and quality parameters before leaving the assembly line, each investment recommendation should align with established supervision rules.
Consequences and Lessons Learned
Non-compliance with regulations has severe implications. In Triad Advisors’ case, the consequences may turn out to be quite serious. FINRA sanctions can lead to censures, steep fines worth hundreds of thousands of dollars, a hefty payout in customer restitution, and even potential dismissals in grave situations.
The incidents associated with Triad Advisors remind us, as investors, to pay close attention to financial advisory firms and their staff’s regulatory footprint. In fact, about 7% of advisors have misconduct records, according to a study published in the Journal of Political Economy. Therefore, as investors, we must remain proactive, carry out due diligence, and verify our advisors’ track records with utmost vigilance.
As the old adage goes, “Trust, but verify.” The financial health of our families depends on it.
