A Financial Industry Regulatory Authority Inc. hearing panel recently ordered David Lerner to pay more than $3.7 million in fines and restitution for overcharging retail customers on sales of more than 1,500 municipal bonds and 1,700 collateralized-mortgage-obligation transactions.
According to a FINRA release, David Lerner charged excessive markups on the transactions from January 2005 through January 2007, resulting in customers’ incurring “unfairly high prices” and lower yields than they should have received.
The Finra panel contends that the firm’s trades “reflected a pattern of intentional excessive markups” in investments that were available at “significantly lower prices” than the firm charged. The investments themselves were rated investment-grade or above, it said.
David Lerner Associates apparently continued with its unfair pricing practices even after receiving a letter of caution about its markups following a 2004 exam and after receiving Wells notices about the issue in July 2009. The panel said it took this history, including that the firm “has not taken any corrective measures to improve their fixed income markups policies and practices” into consideration when setting the sanctions.
The decision, which resolves charges Finra brought in May 2010, includes a $2.3 million fine and restitution to affected customers of $1.4 million, plus interest.
David Lerner has already announced that it plans to appeal the ruling.
If you have questions about investments you made with David Lerner, the securities attorneys of The White Law Group may be able to help. For a free consultation, please call the firm’s Chicago office at 312/238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
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