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Berthel Fisher, Affiliate Fined Regarding Sales of ETFs and Non-traded REITs

Securities fraud lawyers are currently investigating claims on behalf of the customers of Berthel Fisher & Co. Financial Services Inc. and Securities Management & Research Inc., a Berthel Fisher affiliate in Marion, Iowa. In February, the Financial Industry Regulatory Authority (FINRA) announced that it had fined the two a total of $775,000 for supervisory deficiencies. The deficiencies included Berthel Fisher’s failure to properly supervise the sale of leveraged and inverse exchange-traded funds and non-traded real estate investment trusts.

Berthel Fisher, Affiliate Fined Regarding Sales of ETFs and Non-traded REITs

According to the FINRA investigation’s findings, Berthel Fisher did not have adequate written procedures and supervisory systems in place from January 2008 to December 2012 for the following alternative investments:

  • Non-traded REITs
  • Oil and gas programs
  • Managed futures
  • Business development companies
  • Equipment leasing programs

Allegedly, the firm did not accurately calculate alternative investment concentration levels in some cases and, as a result, did not correctly adhere to suitability standards in those instances. Furthermore, Berthel Fisher staff was not adequately trained on the suitability standards for individual states.

In addition, from April 2009 to April 2012, Berthel Fisher allegedly did not have a “reasonable basis” for certain leveraged and inverse ETF sales, according to FINRA’s findings. FINRA investigators also found that non-traditional ETFs were not adequately researched or reviewed, and that the sales force was not adequately trained before registered representatives were allowed to make customer recommendations. Stock fraud lawyers believe that many customers may have suffered significant losses as a result of the recommendation and sale of these products, which were unsuitable for many investors.

Under FINRA rules, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Furthermore, securities fraud attorneys say that firms have an obligation to properly supervise brokers’ activities while they are registered with the firm.

If you suffered significant losses in non-traded REITs or inverse and leveraged ETFs sold by Berthel Fisher or Securities Management & Research Inc., you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C.  at (866) 966-9598  or for a no-cost, confidential consultation.

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