FINRA this week barred a former veteran broker, James Walesa, who has recently been at the center of a more than a dozen investor complaints alleging unsuitable investments that led to conflicts of interests overlooked by broker-dealers where he worked; in eight of those lawsuits his two firms, Triad Advisors and Arkadios Capital, agreed to settle the investors complaints for $18.3 million.
Triad Advisors, now Osaic, has paid the majority of those damages to investors.
FINRA on Tuesday barred Walesa, who was registered with Triad from 2000 to 2019 and Arkadios for two years after that, for failing to cooperate in its investigation of sales of high-risk private investments to clients.
The legal activity around Walesa has been of note; along with the $18.3 million in settlement money paid to clients, former customers of Walesa who sued Osaic two years ago using FINRA’s private arbitration forum lost their complaint that was seeking million of dollars in damages on January 12.
Those clients alleged Walesa had created businesses, held executive positions and raised money from customers to fund those businesses, with Osaic, formerly Triad, negligent in its supervision of the broker’s potential conflicts of interest.
Puzzling to some is how a broker like Walesa could be barred less than a week after a FINRA arbitration panel denied his ex-clients’ claims stemming from his sales practices.
“Walesa’s conduct is obviously problematic and not in his investors’ best interest,” said Adam Gana, a plaintiff’s attorney who has represented Walesa’s clients in complaints against the brokerage firms.
“The fact that a FINRA arbitration panel didn’t see that shows that the FINRA arbitration panels and FINRA itself have a lot of work to do to really go the distance in protecting investors,” he said.
Brokers are routinely barred from the securities industry for not cooperating with investigations; in such instances, they break industry rules requiring cooperation when they do not hand over documents to regulators or appear for testimony.
Walesa, who could not be reached Friday to comment, consented to FINRA’s order without admission or denial to the regulators’ allegations made in a complaint last year, according to FINRA’s order accepting offer of settlement.
Representative for Arkadios and Osaic also did not comment.
According to FINRA’s complaint, which was filed against Walesa in August with FINRA’s internal Office of Hearing Officers, the former advisor in 2020 recommended that an 85-years-old client invest $200,000 from the family trust in the highly speculative Clearday.
The client passed away three weeks later.
Walesa later recommended the client’s daughter invest $100,000 from the family trust into Clearday, which was then called AIU Alternative Care Inc., according to FINRA.
The family in 2023 then filed a lawsuit – or statement of claim – alleging its investment in Clearday was worthless. Walesa disclosed his role with the company as CEO and chairman, but with the outside company, and stated it was not investment related, according to FINRA.
According to the company’s website, Walesa is chair and CEO of Clearday.
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