FINRA Complaint Filed Against Berthel Fisher and Broker Over UIT Sales

FINRA issued the following complaint in May of 2017. Issuance of a disciplinary complaint represents FINRA’s initiation of a formal proceeding in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint. Because these complaints are unadjudicated, you may wish to contact the respondents before drawing any conclusions regarding the allegations in the complaint.
Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher)(CRD #13609, Cedar Rapids, Iowa) and their representative

were named respondents in a FINRA complaint alleging that the representative generated more than $421,000 in concessions for himself and the firm, at the expense of his clients, by recommending and effecting a pattern of unsuitable short-term trading of Unit Investment Trusts (UITs).
The FINRA complaint alleges that Berthel Fisher is liable for the representative’s unsuitable investment recommendations because he was an agent of the firm acting within the scope of his duties when he engaged in this misconduct. The short-term trading patterns were inconsistent with the design of the securities at issue and required the clients to pay substantial sales charges, most of which came back to the firm and the representative in the form of dealer concessions.
The representative allegedly recommended to the clients—many of whom were seniors, unsophisticated investors, or both—that they liquidate UIT positions that they had held for only a few months, and which they had purchased allegedly on the representative’s recommendations, and then use the proceeds to purchase other UITs. Because each UIT purchased carried a new sales load, and because UITs are designed not to be actively traded, the representative’s alleged recommendations were excessive and unsuitable.
Allegedly, the representative also routinely structured the UIT purchases he recommended to the clients in order to prevent the clients from qualifying for sales-charge discounts, which would have reduced the dealer concessions paid to him and Berthel Fisher.
The FINRA complaint also alleges that Berthel Fisher allowed this activity to occur, and in fact, profited from it, as a direct result of its inadequate system for supervising UIT trading. Berthel Fisher allegedly failed to establish and maintain a supervisory system that was reasonably designed to ensure compliance with its and its representative's suitability obligations under the federal securities laws and FINRA and NASD® rules in connection with sales of UITs, and to ensure that customers received sales-charge discounts to which they were entitled on UIT purchases.
Berthel Fisher’s supervisory system was also allegedly inadequate because it was not reasonably designed to prevent short-term and potentially excessive trading in mutual funds.
The FINRA complaint alleges that from 2010 through 2014, Berthel Fisher failed to detect that more than 2,700 of its clients’ UIT purchases did not receive applicable sales-charge discounts. As a result, firm clients paid excessive sales charges of approximately $667,000, nearly all of which was paid to the firm and its registered representatives as dealer concessions.
(FINRA Case #2014039169601)
If you experienced losses in UIT purchases you made from Berthel, Fisher & Company Financial Services and/or their registered representative, contact Soreide Law Group for a no-cost consultation with a securities lawyer regarding the possible recovery of your investment losses due to their actions, recommendations or lack of supervision at:  888-760-6552.
Soreide Law Group represents clients nationwide before FINRA and we operate on a contingency fee basis.  Let our years of experience work for you.