The Financial Industry Regulatory Authority fined two independent broker-dealers owned by Ladenburg Thalmann (LTS) — Triad Advisors and Securities America — $650,000 and $625,000, respectively, on Wednesday for failing to supervise their consolidated client-account reporting systems. Triad also was asked to pay $375,000 in restitution.
This failure, FINRA says, led to statements with inaccurate valuations being sent to customers. In addition, the IBDs did not keep consolidated reports for clients in accordance with securities laws, the regulatory group explains.
“Firms must ensure that consolidated reports sent to customers are clear, accurate and not misleading,” said Brad Bennett, FINRA’s executive vice president and chief of enforcement, in a statement. “Absent proper supervision, consolidated reports can be used by unscrupulous representatives to conceal fraud and theft.”
Both Triad Advisors and Securities America had consolidated report systems that let their financial advisors create reports with customized asset values for accounts held away from the firm. For more than two years, FINRA notes, Triad and Securities America “failed to supervise hundreds of brokers, some of whom were creating and sending false and inaccurate consolidated reports to customers.”