Berthel Fisher Slapped with Massive FINRA Fine in Relation to Non-Traded REIT and Leveraged and Inverse ETF Sales

On February 24, 2014, the Financial Industry Regulatory Authority (FINRA) announced a $775,000 fine against Berthel Fisher for “supervisory failures related to sales of Non-Traded REITs and Leveraged and inverse ETFs.” Non-Traded REITs and leveraged and inverse ETFs can be extremely dangerous financial investment products and they are not suitable for many investors. Various problems can arise from these instruments such as liquidity risk, overconcentration, unsuitability, and many other risks that are not well understood by some investors or brokers. The broker, however, has an obligation to understand the product and know their customer. As such the investor should not blame themselves for misplaced trust.

There is a large incentive for fraud and broker misconduct with Non-traded REITS because they can offer massive commissions to brokers-sometimes as high as 10% of the funds invested.

FINRA previously issued an investor alert for Public Non-Traded REITs here:

and, an investor alert for leveraged and inverse ETF’s here:

In fining Berthel Fisher, FINRA specifically found that “from January 2008 to December 2012, Berthel Fisher had inadequate supervisory systems and written procedures for sales of alternative instruments such as non-traded REITs, managed futures, oil and gas programs, equipment leasing programs and business development companies.”

Aggrieved investors may be able to recover their losses through a FINRA arbitration proceeding and should immediately contact a qualified and experienced securities arbitration lawyer.