Berthel Fisher & Co. Financial Services Inc. at the end of 2022 reported open claims by investors against the firm of $32.1 million in total, or almost eight times what it reported a year earlier, according to Berthel Fisher's annual audited financial statement, which it filed last month with the Securities and Exchange Commission.
The firm's reporting shows potential claims against the firm went through the roof last year. At the end of 2021, Berthel Fisher, which is based in Cedar Rapids, Iowa, and has close to 250 independent contractor reps, reported "open claims" with unspecified damages ranging from $1.1 million to $4.9 million in aggregate, according to its audited financial statement, called a Focus Report.
The firm's Focus Reports for the last two years don't identify the investment or investments that are causing the firm's auditors to warn of spiraling potential legal claims against the firm. Berthel Fisher has been known to sell a variety of alternative investments, which at times can be expensive and volatile and, if they go south, can lead to a slew of investor complaints against a broker-dealer.
Joanna Schaul, Berthel Fisher's senior vice president for administration, did not return calls Monday to comment.
In its filing, Berthel Fisher noted that it had accrued $315,000 in accounts payable relating to these issues, as well as having errors and omissions insurance to protect itself from potential damages and legal costs.
One plaintiff's attorney pointed to two recent alternative investments as possible causes for the skyrocketing potential investor claims Berthel Fisher is facing.
"A lot of these independent broker-dealers have GPB private placement and GWG L bond liability," said Jason Kane, a partner at Peiffer Wolf Carr Kane Conway & Wise. GPB and GWG are alternative investment product sponsors that have been targets of investor complaints recently; GWG declared bankruptcy last year, leaving bond holders with more than $1 billion of bonds. Dozens of broker-dealers sold the GWG L bonds.
"We haven’t hit Berthel Fisher with any potential claims recently, but we have a fair number of alternative investment customer claims against them already," Kane said. "But it's nothing truly out of the ordinary."
Berthel Fisher has a long history of selling alternative investment products.
In 2019, Financial Industry Regulatory Authority Inc. arbitrators awarded six investors $1.16 million in a case in which they alleged Berthel Fisher had sold them inappropriate complex investments. In 2018, Finra censured the firm and fined it $675,000 over sales of nontraded real estate investment trusts, nontraditional exchange-traded funds and other alternative investments.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
