Broker-dealer Triad Advisors and its $1.7 billion AUM registered investment advisor subsidiary, the Atlanta Capital Group (ACG), are involved in a legal tit-for-tat over the latter’s desire to break away and form its own broker-dealer.
In October 2016, Atlanta-based Triad filed a claim with Finra arbitrators arguing that ACG’s attempts to break away broke a restrictive covenant that bound ACG to Triad for a certain number of years and prevented them from working with third-party broker-dealers.
"As a matter of policy, we do not publicly discuss ongoing legal matters," said Joseph Kuo, a spokesperson for Triad Advisors, in an e-mailed statement. Triad declined to answer questions or issue further statements on the matter.
Triad’s claim identifies ACG principals David Millican, Jeffrey Shaver and Joseph Young as defendants. According to the complaint filed with Finra, Millican, Shaver and Young—after registering with Triad—asked to borrow money from the broker-dealer to fund acquisitions and the expansion of their branch office.
In return for financing ACG’s growth via a promissory note, Triad in 2012 required Young, Shaver and Millican to sign a restrictive covenant, an agreement that they would remain associated with Triad during the term of their loan repayment and for an additional five years afterwards, and during such time not affiliate with any broker-dealer other than Triad Advisors.
Triad alleges that Millican, Shaver and Young started to plan to form their own broker-dealer in November 2015, at which time ACG had not fully repaid its debt to Triad. Eventually, in October 2016, the ACG principals began to resign from Triad, starting with Millican on Oct. 3.
Triad filed its complaint on Oct. 21, alleging that Millican, Shaver and Young had executed a comprehensive, long-term plan to violate their agreement.
Along with its complaint, Triad filed in local courts for a temporary restraining order against ACG’s principals preventing them from registering with any other broker-dealer, soliciting other Triad employees or contractors, and soliciting or diverting Triad clients. Triad also sought monetary compensation for legal fees incurred as part of its action.
On Oct. 28, a Fulton County Superior Court judge in Atlanta denied Triad’s request for a restraining order.
In early April, Millican, Shaver and Young filed a response that claimed the complaint lacks merit and which brought counterclaims against Triad.