Berthel Fisher & Co. Financial Services, Affiliate Fined $775,000 for Compliance Failures, Inappropriate Alternative Investment Sales

Attorney Advising Disclaimer

FINRA fined Berthel, Fisher & Company Financial Services, Inc. and its affiliate, Securities Management & Research, Inc. a combined $775,000 for what regulators describe as supervisory deficiencies, including failure to supervise sales of non-traded real estate investment trusts (REITs) and leveraged and inverse exchange-traded funds (ETFs), also called non-traditional ETFs.

FINRA Case #2012032541401

According to FINRA's investigation, Berthel Fisher had inadequate supervisory systems and written procedures for alternative investment sales—including for REITs, ETFs, managed futures and oil and gas programs—between January 2008 and December 2012.

During that period, investigators allege the firm failed to accurately calculate concentration levels for these alternative investments, which caused deficient, inadequate or otherwise incorrect enforcement of suitability standards for multiple investments. The investigation uncovered that Berthel Fisher failed to train its staff on individual state suitability standards, which is ordinarily part of the alternative investment sales suitability review.

Additionally, Berthel Fisher allegedly did not possess a reasonable basis for certain sales of leveraged and inverse ETFs for the period April 2009 - April 2012. The investigation states the firm failed to adequately review or research leveraged and inverse ETFs during this timeframe before allowing brokers and advisers to recommend them to customers; Enforcement also found training to be lacking if not wholly nonexistent.

FINRA's report states that this series of misconduct—combined with failure to monitor the holding periods of these investments—had negative results, "resulting in some instances in customer losses."

If you have invested with Berthel Fisher & Co. Financial Services, Inc., Securities Management & Research, Inc. or with any other firm whose compliance failures, such as supervisory structure shortcomings or procedural deficiencies and lack of staff training has produced inappropriate or unsuitable recommendations or other post-investment misconduct that has proven harmful to your investments or financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

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