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Cedar Rapids, Iowa-based independent broker/dealer Berthel Fisher, which has a couple hundred advisors, is in advanced discussions to be acquired by Cetera, according to sources close to the investment banking community. Other b/ds have looked at buying Berthel Fisher, but Cetera is the only one who has submitted a bid so far.

The two companies have been in discussions for at least the last month, and any deal would likely be an asset sale, said one investment banking source, who declined to be named.

Another source close to the investment banking community said the deal would likely be done soon and would be a semi-distressed transaction. If it were to go through, Berthel Fisher would likely join Cetera Advisor Networks, the firm’s broker/dealer for large branch offices, as a super office of supervisory jurisdiction. This is what Cetera did with Summit Brokerage and Girard Securities.

Cetera spokesman Sean Mogle declined to comment for the story. Tom Berthel, CEO, president and chairman of Berthel Fisher, did not return emails requesting comment, and his assistant did not return a call by press time.

Berthel Fisher includes its IBD as well as Securities Management & Research, its insurance-based b/d; BFC Planning, its corporate RIA; and Berthel Fisher & Company Insurance, its insurance agency. The firm clears through National Financial Services. Cetera Advisor Networks clears through Pershing.

A former employee of the firm, who also declined to be named, said it would make sense that Berthel Fisher would be selling because the firm has been unusually tight-lipped lately. But it surprised him they would go with Cetera.

Jonathan Henschen, president of the recruiting firm Henschen & Associates in Marine on St. Croix, Minn., also said it would make sense for the firm to seek a buyer, given the current environment.

“If there would be any trigger currently that I could see to motivate small and midsized firms to sell, it would be the near zero interest rates on money market sweep accounts,” Henschen said. “This is hard on all firms but especially difficult for small and midsized firms that lack the cushion that scale provides.”

But Berthel Fisher has also faced a number of regulatory and legal expenses in the last few years due to sales of problematic alternative investments, including non-traded REITs, and two sources close to the investment banking community believe that’s contributing to the firm’s need to sell. Last July, for instance, a FINRA panel awarded $1.16 million to clients of the firm who were sold complex alternatives, including equipment leases, direct participation programs and REITs. And in early 2014, FINRA fined the firm and its affiliate Securities Management & Research $775,000 for failing to supervise sales of non-traded REITs and leveraged and inverse ETFs.

Many large broker/dealers have taken such complex alternatives off their shelves given the regulatory and legal risks of selling them. One investment banking source was surprised Cetera would be interested in Berthel Fisher, given its history of selling such products.

“It just seems odd that today, with the world in disarray and all the major firms including Cetera choosing not to sell these types of products, that you would buy a firm that specializes in selling these type of products,” he said.

To that end, it feels more like a headcount or asset grab on Cetera’s part, he added.

“To me it just feels like they’re trying to add advisors and assets by doing fold-in acquisitions that really don’t fit any of their business models.”