CONCORD - The state's Bureau of Securities Regulation announced on Friday it had reached a settlement with broker-dealer and investment adviser Berthel Fisher & Company Financial Services, Inc. for failing to reasonably supervise one of their New Hampshire-based investment advisers.
The settlement was reached at the conclusion of an investigation that began after the bureau received a tip alleging a pattern of unsuitable investment recommendations by Jeffrey Paul Dragon, of Burlington, Mass., a representative of the firm.
During its probe it was learned that from 2010 to 2014, that Dragon committed numerous violations of New Hampshire's securities laws by making unsuitable investment recommendations in Unit Investment Trusts to 11 New Hampshire clients. It was also determined Dragon was able to make these unsuitable recommendations due to deficiencies in Berthel Fisher's reasonable supervision of its agents.
Under New Hampshire law, if the Secretary of State finds that it is in the public interest, an order may be issued to revoke, suspend, condition, or limit the registration of a Bureau registrant, which Berthel Fisher is. Additionally, such an adviser may be disciplined if they failed to reasonably supervise an investment adviser. It was ultimately determined that Berthel Fisher was in violation of this provision.
Per New Hampshire law, an investment adviser must have reasonable grounds for believing that an investment recommendation is suitable for their customer based on that customer's specific circumstances, taking into consideration their other security holdings, their financial situation, and needs. The Bureau determined that Mr. Dragon was in violation of this provision.
As a result of probe findings, Berthel Fisher submitted an offer of settlement, which was accepted.
Per the settlement, Berthel Fisher has agreed to cease and desist from failing to reasonably supervise customer recommendations regarding Unit Investment Trusts, has committed to cease and desist from committing other violations in this chapter, has agreed to pay restitution in the amount of $115,407.25 to 11 New Hampshire investors, has agreed to pay a fine in the amount of $250,000, and to pay for the Bureau's costs in the amount of $50,000.
"We believe this settlement sends a strong message that financial exploitation and unlawful securities practices will absolutely not be tolerated in the State of New Hampshire. Granite Staters need to be able to trust financial advisers registered in this state, and this settlement represents our utmost commitment to ensuring the integrity of these services," said Bureau Director Barry Glennon.
The Bureau of Securities Regulation is an agency of the Secretary of State charged with enforcing the securities laws and protecting investors. Anyone who believes they know someone who has been the victim of investment fraud or misconduct can contact the bureau at (603) 271-1463.