The Financial Industry Regulatory Authority (FINRA) has fined and suspended Karen Lee Chafe, a former Berthel, Fisher & Co. Financial Services, Inc. (Berthel Fisher) registered representative in its Melbourne Beach, Florida offices, for admitting to altering customers’ variable annuity withdrawal forms and IRA distribution/withdrawal request forms. According to FINRA, Karen Chafe, a/k/a Karen Lee Linscott, modified and resubmitted withdrawal request forms at least 61 times on behalf of 14 customers.
According to FINRA’s Default Judgment, Karen Chafe reused old customer forms, whited out or obscured existing information, added new information, and then submitted the altered forms as originals to Berthel Fisher over a period of six years. Although Karen Chafe was authorized to make the withdrawals and distributions, she did not have the customers’ authorization to submit altered forms. Karen Chafe has been assessed a deferred fine of $5,000.00 and suspended from associating with any FINRA member in any capacity for a year. The suspension is in effect from June 16, 2014 through June 15, 2015.
Berthel Fisher, headquartered in Marion, Iowa, is one of the smaller independent broker-dealers whose business model is similar to a franchise operation. Berthel Fisher reportedly has many registered representatives across the United States operating in one or two-person offices. Its branch offices are largely comprised of small producers earning higher commissions than the major full-service brokerage firms. This can be a recipe for disaster when it comes to protecting your investment.
While Karen Chafe’s misconduct may seem innocuous, it is an example of the type of misconduct that cannot be tolerated in the securities industry and it is why FINRA requires broker-dealers to establish and implement a reasonable and adequate supervisory system to protect clients from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, alterations of simple forms could lead to alterations of checks and wire transfer instructions. Clearly, lax supervision can increase the likelihood of brokers taking advantage of clients.
If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages. However, an investor who has suffered damages can bring forth claims to recover losses against his or her brokerage firm resulting from its failure to supervise its employees.
Have you suffered losses in your Berthel Fisher brokerage account? Was your account handled by Karen Chafe? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is actively investigating and accepting clients with valid claims against Berthel Fisher stockbrokers who 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 30 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.