Item: Shepherd Smith Edwards & Kantas, LLP
Rating: 5
Author: M.B.

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David Lerner Associates

David Lerner & Associates: Broker-Dealer Background Information

David Learner Associates, Inc. is a privately-held securities broker-dealer with about $4.5B in clients’ assets under management. The firm’s offerings have included different kinds of municipal bonds, its Spirit of America funds, the Energy 11, LP and Energy Resources 12, LP non-traded mutual funds, the Apple REITs, different types of insurance products, as well as other products and services.

Now headquartered in Syosset, New York, David Lerner Associates was founded in 1976 by David Lerner, who continues to head the firm. The broker-dealer also has branch offices in White Plains, NY, Boca Raton, FL., Lawrenceville, NJ, and Westport, CT.

At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our stockbroker fraud attorneys have been looking into investor claims over losses they suffered because of the proprietary products that David Lerner Associates registered representatives sold to its customers. Call us at (800) 259-9010 to schedule your free, no obligation case consultation.

Sale of Apple REIT Products Lead to FINRA and State Regulator Fines

According to BrokerCheck, David Lerner Associates has 38 disclosures on its record. 21 of these are regulatory events. 17 of them are arbitration cases.

Among the largest sanctions imposed against David Lerner Associates was $14M by the Financial Industry Regulatory Authority (FINRA) in 2012, $12M of which was customer restitution. The self-regulatory organization (SRO) accused the broker-dealer of allegedly unfair practices related to the sale of the Apple REIT Ten, a non-traded real estate investment trust, and of charging customers excessive markups on municipal bonds and collateralized mortgage obligations (CMOs).

FINRA said David Lerner Associates, which was the exclusive distributor of the Apple REIT Ten, also charged excessive markups on this investment. Among those who suffered financial harm were inexperienced investors and older customers for whom this non-traded REIT was always unsuitable. The SRO also alleged misrepresentations and omissions.

Meanwhile, FINRA suspended founder David Lerner from the securities industry for a year, which was to be followed by a two-year suspension from being able to serve in a principal role. He also had to pay $250K.

Earlier in 2012, FINRA had charged the broker-dealer $3.7M for allegedly excessive markups on CMO and municipal bond transactions.

In 2017, the New Jersey Bureau of Securities announced that David Lerner Associates had paid $650K over its Apple REIT Seven, Apple REIT Eight, and Apple REIT Nine sales to customers in the state. The broker-dealer was accused of related compliance failures, including, once again, selling Apple REITs to investors for whom they were unsuitable.

Spirit of America Energy Fund, Energy 11, and Energy Resources 12

David Lerner Associates exclusively sells investments in its Spirit of America funds, including the Spirit of America Investment Fund (SOAEX), and its mutual funds Energy 11 and Energy Resources 12 to customers. All of these are heavily concentrated non-traded oil and gas investments.

The oil, gas, and energy sectors were already experiencing turbulence for some time when Covid-19 struck, causing these areas to take an even deeper downturn. Since then, many investors have suffered huge losses.

As with the Apple REITS, there are questions as to whether David Lerner Associates marketed Spirit of America Investment Fund, Energy 11, and Energy Resources 12 to customers who should never have been taking such risks.

Even if the Coronavirus pandemic never happened, oil, gas and energy investments tend to be volatile, illiquid, and inappropriate for many retail investors, including retirees and others looking to make an income while preserving capital.

David Lerner Associates: Proprietary Products

Here are some of the other proprietary products that David Lerner Associates is known for:

Spirit of America Real Estate Income and Growth Fund (SOAAX)
Spirit of America Income Fund (SOAIX)
Spirit of America Municipal Tax Free Bond Fund (SOAMX)
Spirit of America Income Opportunity Fund (SOAOX)
Spirit of America Large Cap Value Fund (SOAVX)

Fighting for Investors Who Have Been The Victim of Broker-Dealer Misconduct or Negligence

For thirty years, SSEK Law Firm has been representing retail investors, including retirees and conservative investors, high net worth individual investors, and institutional clients in their broker fraud claims. We have recovered many millions of dollars on behalf of our clients. Our stockbroker fraud attorneys have the skills, experience, and resources to go after even the biggest firms on Wall Street.

If you are someone who lost money because of an investment recommendation made to you by a David Lerner Associates broker, call (800) 259-9010.

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