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Berthel Fisher Fined by FINRA for Lax Supervision of REIT and ETF Sales

Marion, Iowa-based Berthel Fisher & Company Financial Services, Inc. (Berthel Fisher) and its affiliate, Securities Management Research, Inc. consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to supervise the sale of non-traded real estate investment trusts (REITs) and exchange-traded funds (ETFs) and also made unsuitable recommendations relating to alternative investments.

FINRA found that between 2008 and 2012, Berthel Fisher failed to have an adequate supervisory system in place for sales of alternative investments such as REITs, managed futures, and oil and gas programs. Berthel Fisher allegedly inaccurately calculated the concentration levels of certain alternative investments, resulting in the failure to meet suitability standards for numerous alternative investment sales. According to FINRA, between 2009 and 2012, Berthel Fisher did not adequately research the non-traditional ETFs prior to having its registered representatives recommend them to investors, nor did the firm properly train its sales people with regard to these alternative investments. Consequently, FINRA imposed a combined fine of $775,000 to Berthel Fisher and its affiliate, Securities Management Research.

This is one of twenty-three (23) regulatory sanctions brought against Berthel Fisher. In 2013, FINRA fined Berthel Fisher for unsuitable recommendations regarding the sales of real estate TICS and funds. Additionally, Berthel Fisher has had numerous sanctions for failing to supervise its registered representatives. In our opinion, the reoccurrence of regulatory violations is symptomatic of poor compliance and supervisory practices and procedures.

Brokerage firms must establish and implement a reasonable supervisory system to protect customers from stockbroker misconduct and to prevent unnecessary investment losses. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages as a result of a stockbroker’s unsuitable recommendation can bring forth claims to recover losses against broker-dealers like Berthel Fisher and Securities Management Research, which should consistently oversee its sales activities in order to prevent the above described prohibited conduct.

Have you suffered losses in your Berthel Fisher account due to your stockbroker’s unsuitable recommendation? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for unsuitable recommendations, misrepresentations, and/or other unauthorized and illegal conduct.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.