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Dallas Broker Mason Gann Suspended: Unsuitable Options Strategy

Mason Gann (CRD# 4030936), a financial professional formerly registered as a broker with Berthel Fisher & Company, was recently the subject of disciplinary action by the Financial Industry Regulatory Authority, sanctioning him in connection to allegations he recommended and executed an unsuitable options strategy. A representative in the firm’s branch office in Dallas, Texas, Gann was issued a three-month suspension.

According to a Letter of Acceptance, Waiver and Consent (No. 2018057425201) dated January 2020, Mason Gann was associated with Berthel Fisher & Company Financial Services from 2012 until the firm terminated his registration in February 2018. FINRA’s findings state that from August 2015 until January 2018, he “recommended and effected a risky options-trading strategy in the account of a retiree and senior investor who had limited income, modest retirement savings, and minimal investment knowledge.” The customer was 71 years old with an account value of about $205,000, according to FINRA, and had taken monthly withdrawals of $1,500 from his IRA to care for various expenses. When he became Gann’s customer at Berthel Fisher, he told Gann that his plan was to keep taking monthly $1,500 withdrawals. FINRA states that the customer’s holdings “did not produce enough income or gains to offset his withdrawals” between 2013 and 2015, that by August 2015 it had declined to about $120,000, and that continued withdrawals at the current rate “was likely unsustainable for the long term.” Gann allegedly “exacerbated the problem by recommending that [the customer] begin trading options,” with the idea that these trades would create more income in the account. FINRA emphasizes that the customer had no other income other than social security benefits, and that his IRA at the firm “represented essentially his entire liquid net worth.” FINRA also notes that he followed Gann’s advice even though “he had little or no experience trading options.”

The findings go on to state that Gann “purchased 22 puts and calls” for the account between August 2015 and January 2018, and that these were unsuitable for the customer due to the risk involved in buying puts and calls, as well as in writing uncovered puts. According to the findings, Gann typically sold the options before they expired, although four of them “expired worthless” while they were still in the account, including one for which the customer had paid a premium of $11,538 at a time when his account balance was about $72,000. “Thus, this single transaction risked — and eventually lost — approximately 15% of the entire value” of the account, FINRA states. The findings conclude that although some of the options contracts recommended by Gann yielded profits, the customer “lost more than $12,500 as a direct result of the unsuitable options strategy,” and that by January 2018 the losses and his usual withdrawals had diminished his account value “to below $20,000.” FINRA states that the foregoing conduct by Gann violated FINRA rules, and suspended him from associating with FINRA member firms for three months.

Mason Gann is currently not registered as a broker. His previous registrations include Berthel Fisher & Company Financial Services, Milkie/Ferguson Investments, and Wachovia Securities. He has passed four securities industry qualifying examinations and his BrokerCheck report lists zero state securities licenses. (Information current as of May 21, 2020.)

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