The law firm of Oakes & Fosher is presently investigating the alleged misconduct of securities broker Dennis Fearing. According to his publicly available FINRA BrokerCheck report, Dennis Fearing has been the subject of multiple customer disputes involving unsuitable private investments throughout his career.
Dennis Fearing is a Minnesota-based securities broker. He had worked in the securities industry for 36 years. During his career, he had been registered with ten different securities firms.
- IDS Financial Services (1984-1986)
- American Express Financial Advisors (1984-1996)
- Financial Advantage Brokerage Services (1996-1997)
- American Investment Services (1997-1997)
- Huntingdon Securities Corporation (1997-2004)
- Fintegra (2004-2005)
- Associated Financial Services (2006-2008)
- Northland Securities (2008-2011)
- Berthel, Fisher & Company (2011-2021)
The Allegations
In December 2020, a customer alleged that Dennis Fearing recommended unsuitable investments. They further alleged that the firm was negligent and did not conduct due diligence. This case was settled for $325,000 in damages.
In June 2021, a customer alleged that Fearing breached his fiduciary duty by misrepresenting the risks of investments and failing to disclose the excessive fees earned on their investments. This case was settled for $14,999 in damages.
In March 2022, a customer alleged that Fearing had recommended unsuitable investments inconsistent with their objectives. They further allege that their account was overconcentrated in privately traded products. This case is pending, and the customer seeks $750,000 in damages.
Private Investments Explained
Private investments are privately traded securities not sold on public securities exchanges that are also not registered with the Securities and Exchange Commission (SEC). Because of this lack of oversight, these products are often very poorly regulated and can often cause significant financial harm to investors.
Many securities brokers use private placements’ complicated nature to misrepresent them as stable investments. The truth is that these products are incredibly speculative and are often illiquid investment options. They are also accompanied by incredibly high upfront fees that can drain investor principals substantially.
Private investments often benefit the securities broker and the firm more than the investor.
Examples of Privately Traded Products
Privately traded investment products can potentially offer high returns, but they also carry significant risks and complexities. Examples include:
- Private Equity: Private equity involves investment in non-public companies. Investors, primarily institutional and accredited ones, directly invest in private companies or engage in buyouts of public companies, resulting in the company becoming private. These investments carry high risk due to limited liquidity and lack of transparency.
- Hedge Funds: Hedge funds are alternative investments using pooled funds that employ different strategies to earn active returns for their investors. They can invest in a wide range of assets but are often less regulated and more risky than mutual funds.
- Real Estate Investment Trusts (REITs): REITs own, operate, or finance income-generating real estate. While publicly traded REITs are pretty common and regulated, private REITs are not traded on a securities exchange and lack particular regulatory oversight, making them riskier.
- Venture Capital: This form of private equity is a type of financing that investors provide to startup companies and small businesses, which are believed to have long-term growth potential. Venture capital investments are generally high-risk, high-return opportunities.
- Direct Investment in Start-ups and Private Companies: Investors may invest directly in private companies, often contributing significant capital in return for an equity stake. This type of investment can be highly risky due to the uncertain nature of start-ups.
These investments aren’t suitable for every investor – particularly those who can’t afford to tie up their assets for long periods or bear the risk of losses. Clear understanding and professional advice are crucial when considering whether to invest.
Failure to Diversify
One of the essential principles of investing is diversification, which means spreading out one’s investments in various assets to reduce overall risk. Unfortunately, Dennis Fearing may have failed to adhere to this principle by overconcentrating his customers’ accounts in private investments.
Overconcentration occurs when a broker places too much of an investor’s assets into one particular investment or asset class. This practice can significantly increase the risks associated with the portfolio and leave investors vulnerable to significant losses if that investment underperforms.
What You Should Do
You may be entitled to compensation if you are an investor who has suffered financial losses due to Dennis Fearing’s alleged misconduct. It is essential to consult with experienced securities fraud attorneys who can evaluate your case and determine the best course of action for recovery.
In cases involving unsuitable private investments, investors may have a claim against both the broker and their firm under the theory of respondeat superior, which holds employers responsible for their employees’ actions within the scope of their employment. Additionally, investors may also have a claim against the firm for failing to properly supervise their brokers and allowing such misconduct to occur.
Ultimately, it is crucial for investors to thoroughly research and understand any investment recommendation made by their broker before making a decision. Monitoring your portfolio and ensuring it aligns with your investment objectives and risk tolerance is also essential.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available after losing money due to securities broker fraud and/or negligence. Investors who have lost money in this fashion may be entitled to damages.
Oakes & Fosher dedicates its entire legal practice to helping investors nationwide. If you, or someone you know, have lost money investing with Dennis Fearing, please contact Oakes & Fosher for a free and private consultation. We handle cases on a contingency basis, which means no fees are charged unless we collect for you.
