The Financial Industry Regulatory Authority Inc. said Tuesday that it fined Berthel Fisher & Co. Financial Services Inc. $100,000 for falling short on compliance related to options trades in a client's account.
Options are highly complicated trading instruments, and while options trades have recently seen a boom among retail investors, many financial advisers avoid options for retail customers. Finra said last summer that it was launching an examination sweep probing the supervision, communications and diligence surrounding the opening of options accounts.
Berthel Fisher, which is known for selling alternative investments, neither admitted or denied Finra's findings in the settlement. A spokesperson for Berthel Fisher did not return a phone call Wednesday morning to comment.
In August 2015, when it was reviewing a customer's request for approval to trade options in his brokerage account, Berthel Fisher failed to exercise due diligence to ascertain the customer's investment experience and knowledge, in violation of industry rules. And between August 2015 and February 2018, Berthel Fisher, through an unnamed broker, recommended options transactions to the same customer without having reasonable grounds for believing that the transactions were suitable for that customer.
During the same period, Berthel Fisher failed to establish and maintain a supervisory system, including written procedures, reasonably designed to achieve compliance with industry rules pertaining to the suitability of options trading in customer accounts, according to Finra. The firm also failed to enforce multiple provisions of its written supervisory procedures pertaining to options trading.
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