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FINRA Sanctions Berthel Fisher for Compliance Failures

By Jessica Antoniades of Shustak Reynolds & Partners, P.C. posted on Wednesday, February 26, 2014.

The Financial Industry Regulatory Authority (FINRA) recently fined the independent broker-dealer Berthel Fisher & Co. Financial Services Inc. and one of its affiliates $775,000 for compliance failures. According to FINRA, Berthel Fisher failed to supervise the sale of alternative investments, including non-traded real estate investment trusts (REITs) and leveraged and inverse exchange-traded funds (ETFs).

The alternative investments at issue included managed futures, oil and gas investments, equipment leasing programs, and business development companies. These complex products are subject to strong compliance and supervision standards, which FINRA determined Berthel Fisher failed to meet. FINRA requires broker-dealers to ensure their registered representatives understand the risks and suitability standards of these products before selling them to customers.

Berthel Fisher consented to the entry of FINRA’s findings, but it neither admitted nor denied the charges. In addition to paying the $775,000 fine, Berthel Fisher must retain an independent consultant to improve its supervisory procedures.

This is just one example of many where a brokerage firm has been fined for failing to supervise and selling unsuitable investments and securities to unsuspecting clients. Shustak Reynolds & Partners, P.C. handles a wide range of securities and FINRA related issues and has substantial expertise and experience in the securities and brokerage business.

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