Log in or Register for enhanced features | Forgotten Password?
White Papers | Suppliers | Events | Report Store | Companies | Dining Club | Videos
Intermediaries
Prime Brokerages
Return to: BBR Home | Intermediaries | Prime Brokerages

FINRA fines Triad Advisors and Securities America over reporting violations

BBR Staff Writer Published 14 March 2014

The US Financial Industry Regulatory Authority (FINRA) has imposed a fine of $650,000 and $625,000 against two firms Triad Advisors and Securities America, respectively, for failing to supervise the use of consolidated reporting systems in accordance with securities laws.

The market watchdog also sanctioned both companies and said that their failure resulted in statements with wrong valuations being sent to customers.

Apart from levying monetary penalty, FINRA ordered Triad to pay $375,000 in restitution.

A consolidated report is a single document that integrates information pertaining to the most or all of a customer's financial holdings, regardless of where those assets are held. Consolidated reports supplement, but do not replace official customer account statements.

Both Triad Advisors and Securities America had systems for consolidated report that allowed their representatives to create consolidated reports, and permitted them to enter customized asset values for accounts held away from the firm and to provide the reports to customers.

Using this practice, some brokers at Triad and Securities created and sent bogus and wrong reports to clients, according to FINRA.

During the investigation, the market supervisor found that Triad and Securities America failed to supervise hundreds of brokers for more than two years, some of whom were creating and sending false and inaccurate consolidated reports to customers.

Their brokers sent numerous consolidated reports contained inflated values for investments, some of which were in default or receivership.

FINRA executive vice president and enforcement chief Brad Bennett said, "Firms must ensure that consolidated reports sent to customers are clear, accurate and not misleading.

"Absent proper supervision, consolidated reports can be used by unscrupulous representatives to conceal fraud and theft."

Triad Advisors and Securities America neither admitted nor denied the charges, but consented to the entry of FINRA's findings.