Securities Lawyers Blog
Current Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher) broker Jonathan Pyne (Pyne) has been subject to five customer complaints. According to a BrokerCheck provided by The Financial Industry Regulatory Authority (FINRA), the primary regulator for securities broker dealers, many of the complaints concern alternative investments. Alternative investments include a group of speculative securities such as non-traded real estate investment trusts (Non-Traded REITs), oil & gas programs, equipment leasing, and other direct participation programs. Our firm has experience handling investor losses caused by these products.
In July 2017 a customer filed a complaint trying to redeem her investment and is alleging that she was misled by the representative into purchasing an investment that she didn’t know was illiquid. The claim is currently pending.
In September 2016 another customer filed a complaint alleging that the investments she purchased in 2008 and 2009 were unsuitable and misrepresented to her by the representative. The claim was settled for $48,175.
Our firm often handles cases involving direct participation products, private placements, Non-Traded REITs, oil and gas offerings, equipement leasing products, and other alternative investments. These products are almost always unsuitable for middle class investors. There are several problems with these products. First, studies have shown that non-traded REITs have historically have underperformed even safe benchmarks, like U.S. treasury bonds – meaning that non-traded REITs provide paltry investment returns considering the risk an investor takes. Alternative investment products like oil and gas partnerships, REITs, and equipment leasing programs are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all.
Second, the brokers who sell these products are paid additional commission in order to hype inferior quality investments. Due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Abuse of these products has become so common place among brokers that many states limit investors from investing more than 10% of their liquid assets in Non-Traded REITs. Many states impose these limitations because its understood that that they provide virtually no benefit to investors in relationship to their risks.
Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost
In addition, the number of disclosures with respect to Pyne is high relative to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Pyne entered the securities industry in 1995. From February 2007 Pyne has been associated with Berthel Fisher out of the firm’s Minneapolis, Minnesota office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.