The Financial Industry Regulatory Authority (FINRA) announced that it has fined Berthel Fisher & Company Financial Services, Inc. and its affiliate, Securities Management & Research, Inc., of Marion, Iowa, a combined total of $775,000. This fine was for supervisory deficiencies, which included Berthel Fisher’s failure to supervise the sale of non-traded real estate investment trusts (REITs), and leveraged and inverse exchange-traded funds (ETFs). FINRA has ordered, as a part of the settlement, Berthel Fisher to retain an independent consultant to improve its supervisory procedures regarding its sale of alternative investments.
FINRA’s findings stated that from January 2008 to December 2012, Berthel Fisher had inadequate supervisory systems and written procedures for sales of alternative investments. These alternative investments included non-traded REITs, managed futures, oil and gas programs, equipment leasing programs and business development companies. FINRA stated that occasionally, the firm failed to accurately calculate concentration levels for alternative investments, causing the firm to not correctly enforce suitability standards for a number of the sales of these investments. Additionally, Berthel Fisher failed to train its staff on individual state suitability standards, which is part of necessary for certain alternative investment sales.
Also, FINRA found that from April 2009 to April 2012, Berthel Fisher did not have a reasonable basis for certain sales of leveraged and inverse ETFs. They did not adequately research or review non-traditional ETFs before allowing registered representatives to recommend them to customers, and failed to provide training to its sales force regarding these products. Berthel Fisher also failed to monitor the holding periods of these investments by customers, resulting in some instances in customer losses.
If you suffered investment losses due to your stock broker/financial advisor’s recommendations regarding non-traded REITs, leveraged and inverse ETFs, or other illiquid, and complex products, call Soreide Law Group for a consultation at no cost with a lawyer on how to potentially recover those losses: 888-760-6552.