As Ladenburg Thalmann explores sale, one of its B-Ds is hit with GPB investor complaints

A half-dozen clients of Triad Advisors filed arbitration claims last quarter totaling $1.65 million

Nov 8, 2019 @ 1:54 pm

By Bruce Kelly

Ladenburg Thalmann Financial Services Inc. has been hit with fallout from GPB Capital Holdings. Ladenburg reported Friday morning that since July, one of its broker-dealers has been named in six customer arbitration complaints seeking $1.65 million in damages.

The complaints stem from the sale of GPB private placements to clients of Triad Advisors, one of the broker-dealers in Ladenburg's network.

According to Ladenburg's quarterly report for the three months ending in September, the clients who filed the complaints allege that Triad was negligent in permitting its reps to solicit investments in the GPB private placements due to "purported excessive risk and unsuitability."

The Triad customers also alleged, among other claims, negligence, breach of contract, failure to supervise and breach of fiduciary duty, according to Ladenburg.

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Triad intends to vigorously defend itself against any GPB litigation, according to the quarterly report. A spokesman for the company could not be reached to comment.

The revelation of the fresh litigation comes at a sensitive time for Ladenburg. The network of five broker-dealers with 4,400 reps and financial advisers is currently weighing offers from potential buyers.

Last Friday, Bloomberg News reported that Ladenburg is in talks with Advisor Group, citing "people familiar with the matter."

Ladenburg Thalmann started building its network of independent broker-dealers in 2007 when it purchased Investacorp Inc. Since then, it has acquired Triad, Securities America, Securities Service Network Inc. and KMS Financial Services Inc.

Meanwhile, GPB Capital, which partnered with dozens of broker-dealers to raise $1.8 billion since 2013, is facing a torrent of woes.

The company is under investigation by the FBI and the Securities and Exchange Commission, and it has failed to produce audited financial statements for its funds. Investors don't know the value of the GPB funds, and thus, of their investments.

In October, the Department of Justice charged the chief compliance officer of GPB Capital Holdings, who is also a former Securities and Exchange Commission examiner, with obstruction of justice relating to an SEC investigation of GPB. This week, an investor filed a class action complaint against GPB, claiming it operated like a Ponzi.

More than 60 broker-dealers sold the GPB private placements, which were supposed to be investing in auto dealerships and waste-management businesses that would produce attractive yields for clients.

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