Daniel Todd Lerner, a securities broker in the White Plains office of David Lerner Associates, has been sanctioned for recommending a high-risk investment to a 92-year-old retiree.
Lerner was suspended from participating in the securities industry for two months and fined $5,000 on May 20 by the Financial Industry Regulatory Authority. He consented to the sanctions.
FINRA also sanctioned David Lerner Associates, based in Syosset, Nassau County, and two other brokers for recommending unsuitable investments.
The firm consented to a censure and agreed to pay more than $1 million in restitution to 146 customers. Maxim Tulupnikoff, based in the Westport, Connecticut office, was suspended for two months and fined $5,000. Martin Lerner, based in Boca Raton, Florida, was suspended for 20 business days and fined $25,000.
Daniel Lerner is the son of the firm’s founder, David Lerner. He has been a registered broker since 1985, and since 2000 he has worked in the White Plains branch office on West Hartsdale Avenue in Greenburgh.
In 2019, he recommended a limited partnership that was developing hydrocarbon-producing properties.
Financial advisers are required to consider factor’s such as a customer’s age, financial situation, investment objectives, time horizon, liquidity needs and risk tolerance, when determining the suitability of an investment.
The prospectus of the limited partnership he recommended stated that it was appropriate only for investors willing and able to assume the risk of a speculative, illiquid, long-term investment.
A 92-year-old retiree who had been his client for more than 20 years had a moderate tolerance for risk, according to FINRA. She invested $60,000 – about 25% of her liquid net worth – in the partnership.
The case appears to be related to a broader, pending investigation. In 2022, FINRA made a preliminary determination that Daniel Lerner had violated rules when he recommended investments in Energy 11 L.P., Energy 12 L.P, and Spirit of America Energy Fund to multiple customers.
The recommendations, according to his FINRA BrokerCheck profile, were made without regard to the suitability of the investments to the customers’ investment profiles. He also allegedly caused the firm to maintain inaccurate customer investment profiles.
“I vehemently disagree with FINRA’s allegations,” Lerner stated on his BrokerCheck profile. “I take my regulatory responsibilities, and my responsibilities to my clients, with the utmost degree of seriousness.”
He said his recommendations were suitable and consistent with the firm’s protocols. He noted that the Covid-19 pandemic wreaked havoc on industries, caused several U.S. companies to temporarily suspend distributions, and “impacted how some investors viewed … investments.”
