Articles Tagged with misrepresentation

Several customers have filed securities arbitration claims against David Lerner Associates Inc. (“David Lerner Associates”) related to brokers’ recommendations to purchase the Spirit of America Energy Fund. The energy mutual fund invests 80% of its assets in energy and energy-related companies.  Class A shares of Spirit of America Energy Fund (NASDAQ: SOAEX) have declined from over $91 per share in August 2014 to around $14 per share in early March 2021. Class C shares of Spirit of America Energy Fund (NASDAQ: SACEX) have declined from over $47 per share in January 2017 to around $13 per share in early March 2021.

Based on public records, Iorio Altamirano LLP believes that the following brokers at David Lerner Associates may have recommended SOAEX to clients:

Name CRD No. Branch Office
Richard Marc Lerner 5163045 Syosset, New York
Martin Lerner 871038 Boca Raton, Florida
Gary W Isler 1514385 Lawrenceville, New Jersey
David Oser 1537076 White Plains, New York
Alan Lowenfels 4512765 White Plains, New York
William Campbell 11880015 White Plains, New York
Francisco Cabral 5257195 White Plains, New York
Daniel T. Lerner 1255769 White Plains, New York
Rafael Klein 2865823 Westport, Connecticut
Glen Howard Werner 6118112 Syosset, New York
Michael Joseph Norton 2617985 Syosset, New York

If a broker at David Lerner Associates recommended the Spirit of America Energy Fund to you and you have suffered investment losses, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

The Spirit of America Energy Fund

The Spirit of America Energy Fund primarily invests in energy-related entities such as exploration companies, production companies, transmission companies, and Master Limited Partnerships (MLPs). The fund’s investment objective is to provide investors long-term capital appreciation and current income. The energy fund is not likely suitable for customers with conservative risk tolerances, short-time horizons, or liquidity needs.

In addition to the energy fund’s poor performance, investors also paid high fees.  Class A shareholders may have paid up to 5.75% of the offering price in sales charges on purchases and an additional 1% deferred sales charge if the shares were redeemed within 12 months of the purchase.  Class A shareholders were also subject to additional annual fees related to operating expenses, including a management fee (.95%) and distribution and/or service (12b-1) fees (.25%).

As the following example shows, as is often the case, the brokers did pretty well by recommending this high fee mutual fund while the customers were left with large losses.

Hypothetical Example:

  • A customer invested $300,000 into Class A shares of the fund in March 2015 when the shares traded at $71 / share.
  • The brokerage firm, David Lerner Associates, for example, would receive a maximum front load fee of $17,250 (5.75% of $300,000).
  • The customer’s original investment would be worth approximately $55,700 today, assuming a share value of $14, excluding other fees, such as the management fee.
  • In this example, the firm that recommended the fund would have made over $17,000 in sale charges. At the same time, the investor suffered losses of $244,300.

The investor might be able to recover financial losses if the broker’s recommendation to purchase or hold the fund was not in the customer’s best interest.

The customer may also be able to recover losses if the broker or firm misrepresented or omitted material facts about the fund in connection with making the buy or hold recommendation.

David Lerner has also received numerous customer complaints related to its sale of Energy 11, L.P. (“Energy 11”) and Energy Resources 12, L.P. (“Energy 12”), illiquid limited partnerships that invested in the oil, gas, and energy sector.   To read more about Energy 11 and Energy 12, please click on the following link: Energy 11, L.P. and Energy Resources 12 L.P.: How to Recover Investment Losses from David Lerner Associates, Inc.

Earlier this year, the Financial Industry Regulatory Authority (“FINRA”) suspended former David Lerner Associates financial advisor, Charles Bonilla, from the securities industry for five months for recommendations of what is believed to be SOAEX and Energy 11.  FINRA concluded that Mr. Bonilla lacked a reasonable basis to recommend these products because he did not perform reasonable diligence before making the recommendations and failed to understand their fundamental features and risks. To read more about the suspension of Charles Bonilla and FINRA’s allegations, click on the following link:  Former David Lerner Associates Financial Advisor, Charles Bonilla, Suspended by FINRA for Unsuitable Energy-Sector Securities – Boca Raton, FL

How to Recover Financial Losses

When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer to be compensated.

Brokerage firms like David Lerner must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations.  When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.

Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.

If you or a loved one were a customer of David Lerner and either sustained financial losses or suspect that the firm did not have your best interest in mind when recommending investments or account transactions, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP.  August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY.   Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.

 

See also:

How to Recover Puerto Rico Bond Losses From David Lerner Associates, Inc.

Broker Spotlight: Daniel T. Lerner of David Lerner Associates, Inc. Facing Three Pending Securities Arbitration Complaints – White Plains, New York

Iorio Altamirano LLP Files Securities Arbitration Claim Against David Lerner Associates, Inc. Related to Unsuitable Recommendations Made by President and CEO Martin Walcoe

 

The Financial Industry Regulatory Authority’s Department of Enforcement has filed a disciplinary proceeding complaint against broker Megurditch Patatian (aka Mike Patatian) alleging that, while associated with Western International Securities, Inc., Mr. Patatian engaged in conduct in violation of FINRA rules, including:

  • making 81 unsuitable recommendations to purchase over $7.8 million in non-traded Real Estate Investment Trusts (REITs) to 59 customers, including 21 senior investors;
  • recommending illiquid non-traded REIT to six customers that also needed liquidity;

Daniel Todd Lerner is a stockbroker with David Lerner Associates, Inc. (“David Lerner ”) in White Plains, New York, with a history of customer complaints.

Mr. Daniel T. Lerner has been the subject of seven customer complaints, which include three pending disputes. The pending disputes are securities arbitration claims filed by customers of Mr. Daniel T. Lerner, alleging that he unsuitably recommended purchasing Energy 11, LP, a limited partnership investment that invests in offshore oil and gas properties.  Two of the complaints also include allegations that Mr. Daniel T. Lerner unsuitably recommended the purchase of the Great Art Fund.   All three complaints allege that Mr. Lerner misrepresented and omitted material facts related to these investments.

Separately, in January 2021, a customer alleged $100,000 in damages resulting from unsuitable investment recommendations concerning a mutual fund, as well as interests in Direct Participation Programs (DPP) and Limited Partnerships (LPs).  A DPP is a financial security that enables investors to participate in a business venture’s cash flow and tax benefits.  The customer did not file a securities arbitration complaint.  Instead, the customer complained directly to David Lerner, and the firm denied the complaint. Customers such as this investor may still file a securities arbitration complaint.  They should contact an experienced securities arbitration attorney to further consultation.

Morgan Stanley’s Global Sports and Entertainment Group is a division of Morgan Stanley Wealth Management that targets professional athletes and entertainers.  The group consists of approximately 168 financial advisors across the country that hold the designation “Global Sports and Entertainment Directors.”   Morgan Stanley promotes that these advisors are uniquely qualified to address the needs of actors, directors, writers, producers, musicians, songwriters, professional athletes, coaches, and sport team owners.  Over the past year, these brokers have received six customer complaints, according to public records.

If you or a client were a customer of Morgan Stanley’s Global Sports and Entertainment Group and either sustained financial losses or suspect that Morgan Stanley did not have your best interest in mind when recommending investments or transactions, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Financial Advisor Darryl Cohen (CRD No. 2786613) – Westlake Village, CA

Professional basketball players Chandler Parsons and Courtney Lee, who have both played in the National Basketball Association, have reportedly filed a $5 million securities arbitration complaint against Morgan Stanley.  According to broker Darryl Cohen’s CRD report, the complaint alleges that Morgan Stanley made payments from the players’ accounts without prior approval.  The complaint also alleges that Mr. Cohen recommended the use of a “liquidity access line” for real estate and life insurance policies for which they “now claim they hold no interest.”

Parsons and Lee were not the first professional athlete to file a claim against Morgan Stanley arising out of broker Darryl Cohen’s conduct.   Former Major League Baseball outfielder Nyjer Morgan filed a securities arbitration complaint against Morgan Stanley in May 2020.  The complaint alleged that Mr. Cohen unsuitably recommended using a liquidity access line” to loan funds to outside business entities.

If you have lost money with broker Darryl Cohen or Morgan Stanley, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

On behalf of a client, securities arbitration law firm Iorio Altamirano LLP has filed an arbitration claim through FINRA Dispute Resolution Services against David Lerner Associates Inc. (“David Lerner”).  The claim alleges that President and CEO Martin Walcoe and David Lerner unsuitably recommended that the customer purchase and hold Puerto Rico municipal bonds and misrepresented and omitted material facts concerning the risk and safety of the bonds.  The recommendations and misrepresentations occurred at a time when credit rating agencies were downgrading Puerto Rico municipal bonds and indicated that further credit downgrades were imminent.   At the time of the recommendations, Mr. Walcoe was an investment counselor and branch manager.

The claim also alleged that David Lerner also failed to suitably and properly allocate the customer’s brokerage account. Instead, David Lerner concentrated the customer’s account in risky, speculative, and uninsured Puerto Rico municipal bonds.

David Lerner’s recommendations to purchase and hold speculative Puerto Rico municipal bonds and its repeated recommendations to concentrate the customer’s investment accounts into speculative junk bonds were unsuitable and not in the customer’s best interest in light of the customer’s investment objectives and “middle ground” risk tolerance.

Mirsad Muharemovic is a stockbroker with Arive Capital Markets LLC (“Arive Capital Markets”) in Brooklyn, NY, with a history of customer complaints and associations with disreputable broker-dealers.

Mr. Muharemovic has 22 years of experience in the securities industry.  He has been associated with nine different broker-dealers, including a past association with a firm expelled by FINRA.

Mr. Muharemovic has been the subject of three customer complaints, including one dispute that is still pending and another one resulting in an arbitration award for the complaining customer.

This post is the first in a series of investigative blog posts that spotlight modern-day boiler rooms that operate under the guise of a reputable brokerage firm.  Many of the broker-dealers featured in this series still use boiler room tactics such as cold-calling customers and high pressure or aggressive sales tactics.  Other brokerage firms have a propensity for broker misconduct, such as excessive trading, churning, unauthorized trades, and misrepresentation.  Iorio Altamirano LLP is a securities arbitration law firm based in New York City. We represent investors nationwide who have suffered investment losses due to wrongful conduct by financial advisors and brokerage firms.  We are investor advocates.

SUMMARY:

  • In 2017, in collaboration with Columbia Law School, Reuters analyzed FINRA data and identified 48 firms whose brokers have been flagged for serious incidents. In 2021, our firm set out to update that analysis. 

Lon Charles Faccini Jr. is a stockbroker with Arive Capital Markets LLC (“Arive Capital Markets”) in Brooklyn, NY, with a history of customer complaints and associations with disreputable broker-dealers.

Mr. Faccini has been the subject of seven customer complaints, which include two pending disputes. The pending disputes are securities arbitration claims filed by customers of Mr. Faccini.  At least one of the customers was also a client of Arive Capital Markets.  The Arive Capital Markets customer alleged excessive trading, churning, and unsuitability.  The second customer alleged misrepresentation and unsuitability.

If you have lost money with broker Lon Faccini or Arive Capital Markets, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

The State of New Jersey Bureau of Securities has suspended the registration of stockbroker Roy Joseph Failla for 45-days and fined him $15,000.

The New Jersey regulator alleged that between October 27, 2014, through September 25, 2019, while employed by First Standard Financial Company in New York, NY, Roy Failla excessively and unsuitably traded two customers’ accounts.

Mr. Failla has since been associated with Arive Capital Markets, LLC (“Arive Capital Markets) in Staten Island, NY as a financial advisor and the firm’s Senior Vice President of Business Development. Also, according to public records, Mr. Failla has an indirect ownership interest in Arive Capital Markets.

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