FINRA Sanctions Berthel Fisher and Former Advisor Jeffrey Dragon
According to the Financial Industry Regulatory Authority (FINRA) on February 6, the regulator has sanctioned Berthel Fisher for charges of failure to supervise sales of unit investment trusts. FINRA reportedly sued Berthel Fisher along with former broker Jeffrey Dragon in April 2017 for structuring sales during 2013- 2014.
FINRA reports in the Order Accepting Offer of Settlement today that Berthel Fisher will be censured,fined $225,000, ordered to pay restitution in the total amount of$117,315.41, plus interest, and ordered to pay disgorgement in the total amount of $299,471.73. FINRA has also reportedly ordered the firm to retain an Independent Consultant.
Berthel Fisher reportedly agrees to pay the monetary sanctions upon notice that this offer has been accepted and that such payments are due and payable.
According to FINRA, Berthel Fischer discharged Dragon in September 2016, stating they believed he did not adhere to a term of his heightened supervision agreement, which required him to run all business, including fixed indexed annuities, through the firm’s commission grid.
Specifically, according to FINRA, Dragon allegedly recommended to twelve clients, many of whom were seniors and unsophisticated investors that they liquidate UIT positions that they had held for only a few months, and which they had purchased on his advice, and then use the proceeds to purchase other UITs. Nearly all of the UITs in question carried sales charges totaling 3.95% before available discounts.
In doing so, the FINRA complaint alleges Dragon generated more than $421,000 in commissions for himself and Berthel Fisher.
Is a Unit Investment Trust Suitable for you?
A UIT is a type of fund that is a mix between an actively managed fund and a fixed portfolio of income-producing securities that is purchased and held to maturity. UITs typically issue redeemable securities, or units, like a mutual fund, which means that the UIT will buy back an investor’s units, at the investor’s request, at their approximate net asset value, according to the Securities and Exchange Commission.
This is not the first time the firm has been in trouble for supervisory issues. Three years ago FINRA reportedly fined Berthel Fisher and an affiliate firm, a whopping $775,000 for a variety of failures to supervise sales of nontraded REITs and leveraged exchange-traded funds that took place from 2008 to 2012.
Brokers are prohibited from engaging in underhanded businesses practice, like churning or unauthorized trading, that violate securities laws and regulations. They have a fiduciary duty to make investment recommendations that are consistent with the clients net worth, investment experience and objectives. Risk tolerance, age, and liquidity needs also need to be considered.
When brokers abuse client accounts and conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
Did you lose money investing with Jeffrey Dragon or Berthel Fisher? If so, the securities attorneys of The White Law Group may be able to help you recover your losses. For a free consultation with a securities attorney, please call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.WhiteSecurtiesLaw.com.