Osaic pays $9.4 million to settle clients' lawsuit involving illiquid alternatives

A former longtime broker with Triad Advisors, which was acquired by what is now Osaic in 2020, continues to cost his former firm millions of dollars in legal settlements, with the latest major settlement this summer totaling $9.4 million.

Jim Walesa is the former Triad broker at the center of the clients’ complaint, and he and Triad for years have faced claims alleging the sale of illiquid investments that did not perform and were allegedly not appropriate.

According to Walesa’s BrokerCheck profile, his old firm, Triad Advisors, on July 1 settled a complaint with investors for $9.4 million.

The large $9.4 million settlement comes a year after Triad agreed to pay another group of Walesa investors $9.75 million to settle their lawsuit.

The clients in the $9.4 million settlement alleged violations of Securities and Exchange Commission, FINRA and state regulations linked to “investment related activities” of Walesa, according to BrokerCheck, with the products involved illiquid and expensive limited partnerships and direct investment programs.

Walesa worked in the securities industry for 39 years before leaving in 2021. He then became CEO of a senior care technology company, Clearday. FINRA barred him from the securities industry earlier this year. 

So far, legal settlements involving Walesa since 2021 have cost Osaic about $26.3 million, according to a tally of his BrokerCheck profile.

InvestmentNews reported in January 2024 that Walesa allegedly sold clients illiquid alternative investments, including real estate deals, that he also managed, owned or directed. In other words, he was allegedly both the salesperson and the product sponsor to some clients.

“It is alleged that the financial professional was involved in unsuitable recommendations for investment in businesses for which he also served in positions of ownership, operation or discretion,” according to Walesa’s BrokerCheck profile, regarding the allegations in the $9.75 million settlement.

Osaic has prevailed in at least one large investor complaint stemming from Walesa’s clients.

A FINRA arbitration panel in January denied a claim against Triad by investors seeking as much as $34 million in damages.

The claim was filed in February 2024 on behalf of dozens of former clients of Walesa.

The investors claimed unsuitable investment recommendations, failure to supervise, violation of common law fraud, breach of fiduciary duty, negligent failure to supervise and negligence, according to the award.

The investors’ lawsuit pointed to a number of conflicts of interest related to the “allegation that Walesa created various business enterprises where he owned, operated or otherwise directed those business and for which he raised funding by creating and operating various limited partnerships,” according to the arbitration award.

“This was the final of three multi-claimant matters involving Mr. Walesa," an Osaic spokesperson wrote Monday in an email. "Only one of the three proceeded to a decision by the panel – the matter in which Triad received a full dismissal, as reported in January following a five-week hearing in Dallas last fall."

"Just as we were unable to comment on the circumstances surrounding that favorable outcome, we are unable to comment on the circumstances or considerations that led to the resolution of this matter," the spokesperson added.