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Articles Posted in David Lerner & Associates

Former David Lerner Associate Broker May Have Sold Spirit of America Energy Fund Among Others to Customers  

The Financial Industry Regulatory Authority (FINRA) has suspended Florida-based broker, Charles Bonilla, for six months. The action comes over allegations that he unsuitably recommended two energy investments to customers while he was a David Lerner Associates stockbroker without having enough knowledge about them.  

Bonilla agreed to the FINRA suspension. He will pay both a $5K penalty and more than $22,400 in disgorgement plus interest. However, he is not denying or admitting to the self-regulatory organization’s (SRO’s) findings. 

FINRA Arbitration Claim Seeks $250K in Damages, Possibly Involving Energy 11 LP

An investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim naming David Lerner Associate, Glenn Howard Werner. Seeking $250K in damages, the claimant contends that misrepresentations and omissions, unsuitable investment recommendations, and a breach of fiduciary duty occurred. 

While not specified in Werner’s BrokerCheck, some sources report that mutual funds and energy investments, including Energy 11, LP may have been involved.

FINRA Arbitration Claim Seeks Up to $100K in Damages for Investor’s Losses

A New York widow is pursuing damages from David Lerner Associates after she suffered losses from investments she purchased at broker Michael Joseph Norton’s recommendation, including the firm’s proprietary Energy 11, LP private placement. Norton, a Syosset, NY stockbroker, has been named in several customer disputes. 

Our New York securities fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) are representing this senior investor in her Financial Industry Regulatory Authority (FINRA) arbitration claim against the brokerage firm. She is seeking up to $100K damages along with interest, costs, and legal fees. 

Pending Customer Disputes Involving David Lerner Associates Broker Rafael Klein Seek $300K in Damages

Rafael Scott Klein, a David Lerner Associates broker and Spirit of America Management Corp. investment advisor, may have unsuitably sold investments in Energy 11, LP to customers. Energy 11 is a non-traded limited partnership set up to acquire and develop natural gas and oil properties in the United States. It was marketed and sold through David Lerner Associates but is no longer available to new investors. 

According to BrokerCheck, Rafael Klein, who has been a David Lerner Associates registered representative for 15 years, is currently the subject of two pending customer disputes. 

Proprietary, Non-Traded Oil, Gas and Energy Investments Plunged  In Value

If your David Lerner Associates broker recommended and sold you any of the firm’s proprietary non-traded oil and gas investments and you sustained significant losses, you may have grounds for an investor fraud claim for damages. 

The privately-held broker-dealer exclusively sold investments and mutual funds to customers in its Spirit of America Energy Fund (NASDAQ: SOAEX), as well as its Energy 11 LP and Energy Resources 12 LP. 

Retiree Alleges Overconcentration in Spirit of America Energy Fund 

David Lerner Associates and its registered representative, Gary Walter Isler, are once again the subject of a Financial Industry Regulatory Authority (FINRA) arbitration claim. The claimant, an elderly widow, is accusing them of causing her to suffer significant retirement losses by unsuitably overconcentrating her portfolio in the Spirit of America Energy Fund. 

This is not the first customer dispute naming Isler, who has been a David Lerner Associates stockbroker for almost 30 years.  

Broker-Dealer Comes Under Scrutiny Over Energy, Gas, and Oil Investment Recommendations 

If you are a retail or conservative investor, a retiree, or any other investor unwilling or unable to take on too much risk and a David Lerner Associates broker sold you oil, gas, and energy investments, our investment fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) would like to offer you a free, no-obligation case consultation. 

Investors who recently invested in the following funds with David Lerner Associates may have been a victim of unsuitable sales practices and have grounds for a claim: 

The dismissal of an Apple REIT class action lawsuit against David Lerner Associates Inc. in U.S. District Court for the Eastern District of New York should have little effect on the Apple REIT arbitration cases that are being resolved through Financial Industry Regulatory Authority arbitration. In fact, most investors are likely to recoup their losses via this avenue.

Per Bloomberg, Investors are contending that they were defrauded in the underwriting and sale of more than $6.8 billion Apple Real Estate Investment Trusts (REITs), which were marketed as suitable for conservative investors. Meantime, Lerner Associates earned over $600 million in commissions and fees as five Apple REITs made above $6 billion.

Last year alone, FINRA told David Lerner to pay $12 million in Apple REIT Ten restitution to investors. The financial firm allegedly targeted elderly investors, misleading them while failing to properly disclose the risks involved in the securities.

The Financial Industry Regulatory Authority is ordering David Lerner Associates, Inc. to pay $14M for allegedly engaging in unfair sales practices involving its Apple REIT Ten and charging clients excessive markups. $12 million of this will be restitution to the investors that bought shares in the $2 billion non-traded real estate investment trust, as well as to clients that were overcharged. $2.3 million is FINRA’s fine against the brokerage firm for charging unfair prices on collateralized mortgage obligations (CMOs) and municipal bonds.

According to the SRO, David Lerner Associates solicited thousands of clients to get them to buy shares in the Apple REIT TEN, of which it is the sole distributor. Elderly and unsophisticated investors were among its sales targets, even as it failed to do enough due diligence to make sure these investments were appropriate for these clients. Instead, the financial allegedly used marketing collateral that was misleading and showed customers performance results for closed Apple REITs without revealing that their incomes were not enough to support distributions to unit owners.

As part of the settlement, the financial firm has agreed to modify its advertising procedures. For example, for three years it will video record sales seminars involving 50 or more participants. It will also prefile its sales literature and ads with FINRA at least 10 days before they are made available for use. Additionally, per FINRA mandate, the brokerage firm will bring in independent consultants to look at proposed modifications to its supervisory system, as well as the training involving the pricing of municipal bonds and CMOs and the sale of non-traded REITs.

Financial Industry Regulatory Authority Inc. arbitrator Alvin Green is ordering David Lerner Associates Inc. to pay claimants Florence Hechtel and Joseph Graziose $24,450 for the Apple REITs that they bought from the firm. They will get the money after returning the Apple REIT 9 shares to the company. The Apple REIT is the 14th largest nontraded real estate investment trust in the US. David Lerner & Associates also will have to reimburse them their $425 FINRA claim filing fee.

According to Graziose and Hechtel, the financial firm misrepresented the Apple REIT 9, as well as breached its fiduciary duty and contract to them. Other Apple REIT investors have made similar claims. However, of the hundreds of arbitration claims (there are also securities lawsuits) that have been pending, this is the first one to go to hearing.

Per FINRA, since 1992 David Lerner & Associates has sold close to $7 billion in Apple REITs, making about $600 million in revenue from the sales (60-70% of the firm’s business since 1996). It is the only distributor of Apple REITs.

Last year, the SRO charged the financial firm with soliciting investors to buy Apple REIT Ten shares (a $2 billion non-traded REIT) without performing a reasonable investigation to make sure the REITs were suitable for these clients. Many of its Apple REIT investors are not only unsophisticated investors but also they are elderly. David Lerner & Associates also allegedly offered misleading information about the distribution online.

Several months ago, FINRA also sued firm owner David Lerner for similar alleged misconduct, including misleading clients about the valuation and risk involved in their Apple REIT Tens. The complaint against Lerner follows statements he is accused of making to investors after FINRA made its charges against the financial firm.

Per the amended complaint, Lerner wrote to over 50,000 clients to “counter negative press.” This letter also talked about a potential opportunity for Apple REIT shareholders to take part in a listing or a sale on a national exchange to get rid of their shares at a reasonable price. Also, at a seminar he hosted Lerner allegedly made statements to investors that were misleading.

For the last nine months, our REIT lawyers at Shepherd Smith Edwards and Kantas, LTD, LPP has been investigating claims on behalf of investors who sustained losses in Apple Real Estate Investment Trusts that they bought from David Lerner Associates. For many investors, these non-traded REITs were unsuitable for them.

First Apple REIT case goes against Lerner, Investment News, May 23, 2012

FINRA Charges David Lerner & Associates With Soliciting Investors to Purchase REITs Without Fully Investigating Suitability; Lerner Marketed REITs on its Website With Misleading Returns, FINRA, May 31, 2011

More Blog Posts:

David Lerner & Associates Ignored Suitability of REITs When Recommending to Investors, Claims FINRA, Stockbroker Fraud Blog, June 8, 2011

REIT Retail Properties of America’s $8 Public Offering Results in Major Losses for Fund Investors, Institutional Investor Securities Blog, April 17, 2012

Shepherd Smith Edwards and Kantas LLP Pursue Securities Fraud Cases Against Merrill Lynch, Pierce, Fenner, & Smith, Purshe Kaplan Sterling Investments, and First Allied Securities, Inc., Stockbroker Fraud Blog, May 10, 2012 Continue Reading ›

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