Two weeks ago GPB Capital and two key executives were charged with fraud for allegedly running a Ponzi-scheme and as a result, many broker-dealers like Triad Advisors that sold GPB are facing lawsuits from investors.
Atlanta, Georgia-based national financial firm Triad Advisors LLC (CRD# 25803) is reportedly contending with 10 disclosure events on its broker record, as per information made available by the Financial Industry Regulatory Authority (FINRA). Apart from 6 regulatory events, there are 4 arbitration cases as well. This is likely just the beginning of new claims against the broker-dealer as several law firms are investing in investors’ losses and filed claims.
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Customer Lawsuits Pertaining to GPB Capital Holdings
Several lawsuits have been filed against and regarding GPB Capital Holdings, a New York-based registered investment advisor, on allegations of serious financial misconduct which include running a ‘Ponzi-like’ scheme that defrauded 17,000 investors out of more than $1.7 billion, based on information made available by the U.S. Attorney’s Office for the Eastern District of New York.
The SEC has added that the scheme was able to run for over four years as GPB continued to hide the condition from investors by neglecting to deliver accurate, audited financial information. As mention earlier, the CEO of GPB Capital, and two others, have recently been arrested.
Triad Advisors has apparently been named in six arbitration complaints in connection with GPB Capital seeking total compensation of $1.65 million.
Sanctions for Supervisory Failures Related Mutual Fund Sales
Triad Advisors has been fined $150,000 and censured by the Financial Industry Regulatory Authority (FINRA) for supervisory failures related to the switching of Class A share mutual funds.
A registered representative of Triad carried out short-term purchase and sale transactions of Class A share mutual funds in 10 customer accounts which resulted in losses in 9 of those accounts aggregating to $43998.48. This happened between June 2015 and July 2017. These transactions were deemed unsuitable for the accounts in which they were done.
The firm will pay impacted investors $43998.48 in restitution plus interest, as also ordered by FINRA.
Triad’s responsibility emanates from their failure to establish a supervisory system that would have enabled them to monitor transactions that violated suitability requirements regarding switching and short-term trading of Class A share mutual funds.
FINRA Lawsuit Filed against Triad Advisors
In addition to the GPB claims, there are additional FINRA lawsuits that have has been filed against Triad Advisors for alleged:
- Breach of fiduciary duty
- Negligent supervision
The claims allege that Triad Advisors exposed its clients by investing unsuitably in numerous high-risk illiquid investments. Additionally, Triad Advisors Inc. failed to perform the necessary due diligence on these investments prior to recommending them to this particular investor, the Statement of Claim has alleged. Damages between $1,000,000.01 and $5,000,000 have been sought in the claim.
Advice to Investors
Broker-dealers have a responsibility to supervise their employees and transactions being done by them. Failure to monitor and supervise exposes them to responsibility for investment losses that arise due to misconduct of employees, through FINRA arbitration proceedings.
Investors should contact an investment fraud lawyer immediately to review their options to recover losses. Haselkorn and Thibaut has set up a toll-free number for GPB investors to call for a free case review at 1 888-628-5590.