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Berthel Fisher and Jeffrey Dragon Named in FINRA Complaint for Unsuitable UIT Trading

Berthel, Fisher & Co. Financial Services, Inc. (Berthel Fisher) and one of its brokers, Jeffrey Dragon, were named in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm and Mr. Dragon profited at customers’ expense due to unsuitable short-term trading of unit investment trusts (UITs).

According to the complaint, while registered with the Burlington, Massachusetts office of Berthel Fisher, Jeffrey Dragon recommended to numerous customers – many who were seniors and/or unsophisticated investors – that they liquidate UIT positions held for just a few months (allegedly purchased upon Mr. Dragon’s recommendations), and use the proceeds to buy other UITs.  Further, the complaint goes on to allege that Mr. Dragon’s recommendations were unsuitable because his recommendations prevented his customers from qualifying for sales-charge discounts.  This strategy increased profits for both Mr. Dragon and Berthel Fisher.

For its part, the FINRA complaint alleges that Berthel Fisher not only failed to supervise the recommendations and trading strategy of its employee, Mr. Dragon, Berthel Fisher directly profited as a result of its inadequate supervision.  Further, the complaint alleges Berthel Fisher’s supervisory systems were lacking in a number of areas, including prevention of short-term and excessive UIT trading and ensuring that its customers received all sales-charge discounts.  According to the complaint, during the relevant period of its investigation, Berthel customers paid approximately $667,000 in excessive sales charges.

Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of fraudulent and unlawful behavior which are in violation of industry rules and procedures.  In order to protect customers from broker misconduct, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system.  The implementation of the rules requires supervisors to monitor its employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures.  If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for losses flowing from the employees’ misconduct.  As a result, account holders who have suffered losses stemming from a broker’s unsuitable recommendations, excessive trading, or failure to apply sales-charge discounts can bring forth claims to recover damages against broker-dealers like Berthel Fisher, which have a duty to supervise its employees in order to prevent stockbroker misconduct.

Have you suffered losses in your Berthel Fisher account?  Was Jeffrey Dragon your stockbroker?  Do you feel that your stockbroker may have failed to inform you of and/or apply sales-charge discounts? 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 Berthel Fisher stockbrokers who may have engaged in misconduct and caused investors losses.

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 35 years, 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 visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.