Berthel, Fisher & Company Financial Services, Inc. (“Berthel Fisher”) (CRD# 13609) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Berthel Fisher, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.
If you believe you have a claim against Berthel Fisher, you should strongly consider hiring an investment loss lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
Can I Sue Berthel, Fisher & Company Financial Services, Inc.?
If you’ve lost money caused by Berthel Fisher and/or its employees’ misconduct then the answer is, YES, you can sue Berthel Fisher but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Berthel Fisher in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Berthel Fisher is to call Attorney Pearce at our office at 800-732-2889.
What is Berthel, Fisher & Company Financial Services, Inc.?
In 1983, Berthel Fisher (CRD# 13609) was first registered as a FINRA broker-dealer. The company is controlled by Berthel Fisher & Company and headquartered in Cedar Rapids, Iowa. Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 230 Berthel Fisher branch offices with over 350 registered representatives in almost every state. More than half of Berthel Fisher’s branch locations are single representative office with no on-site supervisors other than the financial advisors themselves.
Berthel, Fisher & Company Financial Services, Inc. Has Many Different Regulatory Problems
Berthel Fisher’s rapid growth has not been without consequences. There have been approximately 25 Federal, state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) ) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Berthel Fisher for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
We have reported and written about these regulatory problems and customer complaints over many years. Berthel Fisher is a repeat offender: there are over 9 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another in the last decade.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS BERTHEL FISHER & COMPANY FINANCIAL SERVICES, INC. HAS FACED OVER THE YEARS*
Berthel Fisher has been repeatedly censured, warned, and fined millions for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:
FINRA Sanctions Berthel Fisher For UIT And Mutual Fund Sales Abuses
FINRA investigated and discovered that Jeffrey Dragon, a registered representative of Berthel Fisher generated approximately $417,000 in concessions for himself and his firm, at the expense of his customers, by recommending and executing a pattern of unsuitable short-term trading of unit investment trusts (“UITs”). This was just the tip of the iceberg because as FINRA investigated further discovered that over 2700 customers failed to receive the UIT sales discounts to which they were entitled.
Dragon’s customers, many of whom were seniors, unsophisticated investors, or both, were advised to liquidate UIT positions that they had held for only a few months, and which they had purchased on Dragon’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, Dragon’s recommendations were excessive and unsuitable.
Dragon’s recommendations to these customers were further unsuitable, in that he designed his recommendations to prevent his customers’ UIT purchases from qualifying for sales charge discounts. Despite regularly recommending that customers purchase UITs in amounts that exceeded volume-discount “breakpoints” of $50,000 and $100,000, Dragon routinely structured their investments – by spreading the amounts over smaller purchases and multiple days – in order to avoid reaching those thresholds. By doing so, Dragon sought to increase his concessions at his customers’ expense.
It was obvious to FINRA that Berthel Fisher allowed this activity to occur – and, in fact, profited from its inadequate system for supervising UIT trading. During the relevant period, Berthel Fisher’s only regular supervisory review of UIT recommendations and customer activity consisted of manual reviews of daily trade blotters that did not indicate either how long UIT positions had been held before liquidation or the source of funds used to purchase new UITs. Thus, Berthel Fisher’s supervisory system was not reasonably designed to prevent short-term and potentially excessive UIT trading.
FINRA concluded that Berthel Fisher’s supervisory system was also inadequate because it was not reasonably designed to prevent short-term and potentially excessive trading in mutual funds. As with UITs, the firm’s supervisory system lacked any methods, reports, or other tools to identify mutual-fund switching or trading patterns indicative of other misconduct.
FINRA also concluded that Berthel Fisher’s supervisory system was not reasonably designed to ensure that the firm’s UIT and mutual-fund customers received all sales-charge discounts to which they were entitled during the UIT Period and Mutual Fund Period, respectively. Instead, Berthel Fisher relied on its registered representatives and its clearing firm to determine whether UIT and mutual-fund purchases should receive sales-charge discounts, and conducted no review or supervision to determine if those discounts were applied correctly.
FINRA found that Berthel Fisher’s supervisory lapses not only allowed Dragon’s breakpoint-manipulation scheme to go unchecked, but it also resulted in further injury to Berthel Fisher’s customers; Berthel Fisher failed to detect that more than 2,700 of its customers’ UIT purchases did not receive applicable sales-charge discounts. As a result, Berthel Fisher customers paid excessive sales charges of approximately $667,000, nearly all of which was paid to Berthel Fisher and its registered representatives as dealer concessions.
Notwithstanding the widespread evidence of sales abuse, FINRA only slapped Berthel Fisher on the wrist with a censure, fine of $225,000, restitution order in the total amount of $117,315.41, plus interest, ordered Berthel Fisher to pay disgorgement in the total amount of $299,471.73, and ordered to retain an Independent Consultant to rewrite it supervisory procedures.
FINRA Sanctions Berthel Fisher For Not Supervising Alternative Investments
FINRA investigated and found Berthel Fisher had an inadequate supervisory system and written procedures, including those concerning its suitability review of transactions in nontraded Real Estate Investment Trusts (“REITs”), non-traditional exchange-traded funds (“ETFs”) and other alternative investments. Further, Berthel Fisher’s supervisory systems and procedures failed to prevent a number of unsuitable sales of alternative investments. In addition, FINRA found that Berthel Fisher did not conduct adequate supervisory oversight of a remote branch office and failed to retain certain electronic communications as required.
In its investigation, FINRA discovered that Berthel Fisher failed to implement an adequate supervisory system, including adequate written procedures, for the sale of alternative investments that was reasonably designed to achieve compliance with NASD Rule 2310, FINRA Rule 2111 and state and prospectus suitability standards. Specifically, the method used by the Berthel Fisher to calculate concentration limits and enforce its own aggregate alternative investment suitability standard did not accurately record all of the alternative investments, including managed futures, oil and gas programs, equipment leasing, business development companies (“BDCs”) and non-traded REITs, in a customer’s portfolio; the Firm did not train its supervisory staff to appropriately analyze state suitability standards as part of its suitability review of certain alternative investments; the paperwork used by the reviewing principal to assess state suitability standards did not consistently contain the appropriate state’s suitability standards; and the Firm had inadequate controls to ensure that its staff, in effecting an alternative investment transaction, used current and accurate subscription agreements as part of the alternative investment purchase paperwork. Berthel Fisher therefore violated NASD Rule 3010(a) and (b), NASD Rule 2110 and FINRA Rule 2010.2
Further, FINRA discovered that Berthel Fisher did not implement adequate supervisory systems and procedures in connection with the sale of certain non-traditional ETFs. Specifically, Berthel Fisher did not fully assess the features or risks associated with these ETFs during the relevant period, and did not adequately train registered representatives regarding these products. Accordingly, it found Berthel Fisher did not have a reasonable basis for recommending the sale of any of these products. As a dug deeper, FINRA discovered Berthel Fisher also did not conduct adequate supervisory reviews of non-traditional ETF transactions and did not adequately monitor positions to detect and prevent unsuitable buy-and hold strategies in customer accounts. Berthel Fisher therefore violated NASD Rule 3010(a) and (b), NASD Rule 2310 and FINRA Rule 2010.
Finally, FINRA found multiple remote offices supervisory lapses. For example, Berthel Fisher did not implement a supervisory system, by among other things, neglecting to conduct adequate audits of the branch office and neglecting to conduct timely reviews of emails from the branch. Based on this conduct, Berthel Fisher further violated NASD Rule 3010 and FINRA Rule 2010. Berthel Fisher also failed to retain emails for certain email domains, including the primary domains used by Berthel Fisher and therefore violated Section 17(a) of the Securities Exchange Act of 1 934 (the “Exchange Act”), Rule 17a-4 thereunder, NASD Rule 3110(a), NASD Rule 2110, and FINRA Rule 2010.
Notwithstanding the widespread misconduct and rule violations, Berthel Fisher was spared the punishment it deserved and only received the following sanctions: a censure and a fine of $675,000 and was only ordered to pay restitution to customers in the total amount of$13,292.53.
FINRA Sanctions Berthel Fisher For Not Supervising Private Placement Sales
Over the years, Berthel Fisher has participated in a number of private offerings of securities. However, during the relevant period, Berthel Fisher’s written supervisory procedures were deficient relating to private offerings of securities.
Among other things, the written procedures did not reference how Berthel Fisher would monitor for compliance with the applicable rules and regulations relating to private offerings of securities. Further, the written procedures did not provide any detail regarding the method or manner in which any supervision of private offerings of securities was to occur. Moreover, the written procedures also did not identify any Berthel Fisher associated person responsible for compliance with respect to rules and regulations relating to private offerings of securities. In addition, the written procedures failed to describe what steps a Berthel Fisher associated person, who would be responsible for monitoring for compliance with respect to private offerings, should take if potential violative activity was discovered. Finally, Berthel Fisher‘s written procedures failed to describe how a Berthel Fisher associated person, who would be responsible for monitoring for compliance with respect to private offerings, would document their oversight of private offerings of securities.
FINRA concluded that those acts, practices and conduct constitute separate and distinct violations of NASD Conduct Rules 3010(b) and 2110 by Berthel Fisher and slapped it on the wrist with a censure and small fine.
FINRA Sanctions Berthel Fisher For Not Supervising Options Transactions
During the relevant period, a Berthel Fisher financial advisor recommended and executed options transactions in the accounts of customers without having reasonable grounds for believing that these recommendations were suitable for the customers on the basis of the customers’ investment experience, financial situation and/or age.
Berthel Fisher’s registered options principal, was responsible for supervising the options transactions recommended and executed by the stockbroker. As a result of FINRAs investigation, it determined that the firm’s option principal failed to adequately supervise the representative who was allowed to recommend and execute these options transactions when the manager knew or should have known that these transactions were unsuitable for the customers. Through these acts, Berthel Fisher and its option principal violated NASD Conduct Rules 3010(a) and 2110 but were only jointly and severally fined $10,000. The manager was suspended for 10 days.
*Above are only some of the regulatory disciplinary actions filed against Berthel Fisher by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another almost 20 more BrokerCheck disclosures.
Berthel Fisher Customer Complaints
There have been scores of customer complaints filed against Berthel Fisher stockbrokers and investment advisors over the years. We have launched many investigations of current and former Berthel Fisher advisors:
- Andrew Perri of Berthel, Fisher & Company Financial Services, Inc.
- Darryl Tureaud of Berthel, Fisher & Company Financial Services, Inc
- John Carroll of Berthel Fisher & Company Financial Services
- Genevieve Mar of Berthel, Fisher & Company Financial Services, Inc
- Ryan Derks of Berthel Fisher & Company Financial Services
- Ryan Benning of Berthel Fisher & Company Financial Services
- Steve Cummings Formerly With Berthel, Fisher & Company Financial Services
- Jeremy Hay of Berthel Fisher & Company Financial Services
- Christopher Sweistris of Berthel Fisher & Company Financial Services
- Christopher Hasbrouck of Berthel Fisher & Company Financial Services, Inc.
If you have lost money investing with any of these Berthel Fisher advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call us at 800-732-2889.
Why Does Berthel, Fisher & Company Financial Services, Inc. Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.
The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers.
Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.
These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.
Did Berthel, Fisher & Company Financial Services, Inc. Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Berthel Fisher is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Berthel Fisher without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By Berthel, Fisher & Company Financial Services, Inc. Today!
The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Berthel Fisher cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.