Failures to Supervise Sales of ETFs, REIT Shares, Result in Almost $1M Fines by FINRA, State Securities Watchdogs, Against Berthel Fisher

FINRA fined Iowa-based Berthel Fisher yesterday for various supervisory deficiencies, including "failure to supervise the sale of non-traded real estate investment trusts (REITs), and leveraged  and inverse exchange-traded funds (ETFs). As part of the settlement, Berthel Fisher must retain an independent consultant to improve its supervisory procedures relating to its sale of alternative investments."

FINRA Executive Enforcement VP, Brad Bennett, said in a statement, "A strong culture of compliance is an essential element of the proper marketing of complex products. Berthel's supervision of the sales of nontraded REITs, inverse ETFs and other products fell short of this standard, as it failed to ensure that its registered representatives understood the unique features and risks of these products before presenting them to retail clients."

According to a report by InvestmentNews, Berthel Fisher did not admit or deny culpability, and instead claimed the regulatory investigation was “a result of a 'sweep' done by FINRA throughout the industry” and settled the enforcement action out of a desire “to eliminate any on-going legal expenses.” Berthel Fisher's BrokerCheck record indicates various state regulators have also fined the firm for sales of "unsuitable" investment products.

See also, Darwin or Dodo? Non-Traded REITS Will Reform or Perish.