Jeffrey Dragon – Berthel Fisher – Supervisory Issues – Update
According to the Financial Industry Regulatory Authority (FINRA) on February 5, the regulator censured and fined Berthel, Fisher & Company Financial Services (CRD #13609, Cedar Rapids, Iowa) for supervisory issues regarding former advisor Jeffrey Dragon and alleged sales of unit investment trusts.
Berthel Fisher has reportedly been fined $225,000, and ordered to pay the total amount of $117,315.41, plus interest, in restitution to customers.
Additionally the firm was reportedly ordered to disgorge the total amount of $299,471.73 of concessions received to FINRA and required to retain an independent consultant to conduct a comprehensive review of the adequacy of the firm’s policies, systems and procedures and training relating to all products that it offers to customers, including but not limited to unit investment trusts (UITs) and mutual funds.
Without admitting or denying the allegations, Berthel Fisher reportedly consented to the sanctions and to the entry of findings that former registered representative, Jeffery Dragon allegedly generated approximately $417,000 in concessions for himself and the firm, at the expense of his customers, by purportedly recommending and effecting a pattern of unsuitable short-term UIT trading.
FINRA’s findings stated that the firm is liable for Dragon’s unsuitable investment recommendations because he was an agent of the firm acting within the scope of his duties when he allegedly engaged in this misconduct.
The short-term trading patterns were allegedly inconsistent with the design of the securities at issue and required the customers to pay substantial sales charges, most of which purportedly came back to Berthel Fisher and Jeffery Dragon in the form of dealer concessions.
According to FINRA, Berthel Fisher allegedly allowed this activity to occur, and in fact, profited from it, as a direct result of its inadequate system for supervising UIT trading.
According to FINRA, the firm’s supervisory system was not reasonably designed to prevent short-term and potentially excessive trading in UIT trading. The firm’s supervisory system was also reportedly inadequate because it was not reasonably designed to prevent short-term and potentially excessive trading in mutual funds.
For FINRA’s full findings see FINRA Case #2014039169601.
Failure to Supervise
The White Law Group continues to investigate the liability that Berthel Fisher may have for failure to supervise its former employee, Jeffrey Dragon.
Brokers 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. Furthermore, brokers are prohibited from engaging in underhanded businesses practice, like churning or unauthorized trading, that violate securities laws and regulations.
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. 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.
If you suffered losses investing with Jeffrey Dragon and Berthel Fisher, the 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.