Farmers Financial Solutions Terminated Broker, Kirk Bertsch, For Allegedly Selling Unregistered Promissory Notes
Kirk Bertsch is a former Financial Advisor at Farmers Financial Solutions, LLC in Spearfish, SD. Kirk Bertsch has been in the securities industry since 2000 and previously worked at Investors Brokerage Services.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on July 31, 2018, the South Dakota Division of Securities issued a cease and desist order against Kirk Bertsch for failing “to obtain proper approval from his firm before engaging in private securities transactions with Woodbridge Wealth.” Subsequent to the disciplinary action taken by the State of South Dakota, FINRA sanctioned Kirk Bertsch for allegedly participating in private securities transactions. FINRA suspended Kirk Bertsch for one month and ordered the disgorgement of all commissions received.
For a copy of the FINRA sanction, click http://www.finra.org/sites/default/files/fda_documents/2018059666301%20Kirk%20J.%20Bertsch%20CRD%204132889%20AWC%20jm.pdf
Unapproved private securities transactions are referred to in the industry as “selling away.” FINRA strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.
The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.
For years, the Woodbridge Group of Companies, operated a ponzi scheme in which it sold (through outside financial professionals) promissory notes allegedly backed by mortgages. The investment program turned out to be a $1.2 billion ponzi scheme and Woodbridge’s principal, Robert Shapiro is currently under criminal indictment.
According to the SEC’s complaint filed against Woodbridge, the Woodbridge business model was to borrow money from investors in exchange for promissory notes, maturing usually in 12 or 18 months. The notes had an annual interest rate of 5% to 8% payable monthly. The investors’ money was supposed to be issued to lenders in the form of securitized mortgages, but rarely was, according to the SEC. Alan New is allegedly one of the outside financial professionals that sold the fraudulent notes to unsuspecting customers.
In December 2016, Woodbridge declared bankruptcy.
For a copy of the Kirk Bertsch CRD, click https://brokercheck.finra.org/individual/summary/4132889#disclosuresSection
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