In March 2021, Northstar Financial Services (Bermuda) looked headed to bankruptcy-related liquidation, two years after the US Department of Justice issued charges of wire fraud and bribery to Northstar owner Greg Linberg (formerly of San Mateo, CA), by way of parent company Global Bankers. At the time, it appeared Northstar's demise could prove costly for investors who were unsuitably sold Northstar products.
Although much of Northstar's staff shared a prior employer in Sun Life Financial, it is actually a SunTrust Investment Services representative who presently faces several claims of unsuitable recommendations in FINRA's dispute system.
Former SunTrust Investment Services and present Truist Advisory Services investment adviser Stephen Berrocal aka Steve Berrocal (CRD #3071400) stands accused of three disputes totaling an alleged $1.2 million in damages.
Berrocal submitted a comment to one of these disputes in which Berrocal wrote that "Northstar's fixed rate investment contracts had been approved for sale on the SunTrust platform for many years." Berrocal concluded these remarks by stating, "there is no way I could have known about or anticipated [problems at Northstar] when I recommended the product to these clients."
In other words, the accused rep named his former firm—SunTrust Investment Services in this case—as the entity which approved Northstar for sale by SunTrust representatives. Northstar Financial Services offered both variable-rate and fixed-rate investments during its time in operation.
As the Berrocal dispute illustrates, it is often the broker or adviser's firm that is primarily responsible for issues related to supervision, which would include the approval of products for sale on its platform, and to ensure that these products are suitable for retail customers.
Although brokers and advisers carry a certain duty of care for their individual clients, the firm's supervisory oversight is effectively an umbrella which is designed to protect against catastrophic and significant threats or liabilities.
When it comes to Northstar Financial Services (Bermuda), red flags not only led the Department of Justice to pursue fraud charges against Lindberg and others in connection with what the government deemed "a bribery scheme," it preceded the Supreme Court of Bermuda's March order that all but ensured liquidation, effectively setting Northstar investors up for massive losses.
Depending on the circumstances of an investor's involvement with Northstar, it could very well be the client's firm, as well as broker or investment adviser, that is on the hook for damages due to unsuitable recommendations, failure to supervise, or negligence.
If you invested with Suntrust Investment Services or any FINRA-member firm in Northstar Financial Services (Bermuda) products which were unsuitably recommended given your investment preferences or risk tolerance level, resulting in damages as Northstar itself collapsed, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.