A former Hartsdale securities broker has been banned from the industry for six months, fined $10,000 and ordered to return $153,476 in commissions for placing customers in risky investments.
The Financial Industry Regulatory Authority found that Lawrence Merl violated rules that require brokers to base recommendations on customers’ investment profiles and to observe “high standards of commercial honor and just and equitable principles of trade.”
Merl, who worked for David Lerner Associates in Hartsdale from 1994 through 2022, consented to the sanctions last September. FINRA published its findings in its December monthly report.
From 2015 through 2017, Merl recommended that four clients invest in limited partnerships that were formed to acquire and develop oil and gas properties. The partnerships would make distributions, dependent on performance, and then after five to seven years enable the investors to cash out.
Each partnerships, according to the prospectuses, was appropriate only for investors willing and able to accept the risk of a “speculative, illiquid, and long-term investment.”
The four customers, however, were elderly, or retired, and were seeking low-risk investments to provide monthly income. One client, for instance, was 76, retired, and receiving Social Security payments. But Merl persuaded the individual to invest $984,600 in a partnership
Merl received $153,476 in commissions on the clients’ investments. The FINRA report does not say how much money, if any, the clients lost.
Merl was sanctioned previously.
In 2004, he agreed to pay a $10,000 fine and return $42,000 in commissions for recommending that three customers buy illiquid real estate investment trusts with borrowed money.
In 2020, he was accused of misrepresenting an unsuitable private placement offering in an energy partnership. An arbitration case was settled in 2021 for $750,000.
Merl is not currently associated with any brokerage firms, according to the FINRA report, but he remains subject to its jurisdiction.
