Berthel Fisher & Co.: (CRD#:13609/SEC#: 801-62277,8-29426)
This firm was founded in 1974. It is located in Cedar Rapids, Iowa and has approximately 350 representatives.
Other names this firm uses are:
- Berthel Fisher & Company
- Berthel Fisher & Company Financial Services, Inc.
- Berthel Fisher & Company Inc.
- Berthel, Fisher & Company Financial Services, Inc.
- Fisher & Fleischman Financial Services, Inc.
Berthel Fisher Sanctioned by FINRA for Unsuitability and Failure to Supervise Berthel Fisher & Co. Financial Services, Inc. (CRD No. 13609) just settled a FINRA investigation after allegations of unsuitability were made by a customer, which then exposed poor supervisory practices that contributed to investment loss. Both of these are violations of FINRA rules meant to protect investors. Berthel Fisher is a long-standing member of FINRA, and has more than 250 registered representatives and more than 160 branches to serve retail investors.
Summary of the Sanction The company submitted a Letter of Acceptance, Waiver, and Consent to (Financial Industry Regulatory Authority) FINRA, where it was approved April 26, 2022. FINRA sanctioned Berthel Fisher with a censure and a $100,000 fine. In addition, the company must implement supervisory systems and written supervisory procedures to specifically address the flaws in their systems that made these violations possible, and submit these plans in writing to FINRA within 90 days.
Allegations The initial investigation came about due to a customer dispute that was filed with FINRA. According to the FINRA sanction, it is alleged that in August 2015, Berthel Fisher granted a customer’s request to trade options in their brokerage account. However, the firm did not follow due diligence practices; it did not explore whether the customer had the investment experience and knowledge to carry out trades independently. Later, a Berthel Fisher broker recommended options transactions to the same customer; however, the broker’s suggestions did not meet suitability standards. These are violations of FINRA Rules 2360(b)(19), 2111, and 2010. The FINRA sanction alleges that during the same period, “Berthel Fisher failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with FINRA’s rules pertaining to the suitability of options trading in customer accounts. Berthel Fisher also failed to enforce multiple provisions of its written supervisory procedures pertaining to options trading. Through this conduct, Berthel Fisher violated FINRA Rules 2360(b)(20)(A), 3110(a), 3110(b), and 2010.”
What Does Suitability Mean to Investors? Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses. Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy. Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered. The employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
See Berthel, Fisher & Company Financial Services, Inc. Individual Broker Complaints by Following the Links Below