David Lerner and Associates Fined Over $12M in Restitution

Long Island brokerage firm david lerner associates going out of business has been accused of ripping off customers with investments that were never suitable for them. The self-regulatory body finra has ordered the broker to pay over $12 million in restitution to people who bought into a $2 billion nontraded real estate investment trust as well as those that were charged excessive markups on municipal bonds and collateralized mortgage obligations. Founder and chief executive David Lerner was fined personally as well.

What is mean by associates?

The broker-dealer, headquartered in Syosset, N.Y., has $4.5 billion in client assets and six branches. Lerner is known in the New York metropolitan area for saturating radio airwaves with ads that feature his grandfatherly nickname “Poppy” and testimonials from alleged satisfied customers.

In 2012, the Financial Industry Regulatory Authority imposed $14M in sanctions against the company, $12M of which was customer restitution. The broker-dealer had been criticized for selling Apple REIT Ten, a non-traded real estate investment trust that was marketed to inexperienced investors and older customers who were ill-equipped to deal with the illiquidity of this type of product. The broker-dealer was also accused of charging excessive markups on municipal bonds and CMOs, and for making misrepresentations in sales presentations and performance reports.

In addition to the FINRA sanction, the company was fined by New Jersey regulators for selling the REITs to customers in violation of state law. KlaymanToskes has filed a number of investor disputes against brokers at david lerner and associates who recommended high-commission, illiquid, and proprietary financial products to clients that were not suitable for their unique investment objectives and risk tolerance levels. Brokerage firms and their registered representatives have a duty to fully disclose the underlying risks, sales charges, and operating expenses of any product they sell or recommend to customers.

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