Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Martin Lerner (Lerner), previously associated with David Lerner Associates, INC., has at least 3 disclosable events. These events include 2 customer complaints, one regulatory event, alleging that Lerner recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on May 20, 2025.
Without admitting or denying the findings, Lerner consented to the sanctions and to the entry of findings that he failed to reasonably supervise sales of illiquid, proprietary limited partnerships to ensure that the sales were suitable for customers given their investment profiles. The findings stated that Lerner was aware of, but failed to reasonably investigate and respond to, red flags of potentially unsuitable recommendations of the limited partnerships. These red flags included patterns of sales of the illiquid limited partnerships to seniors and unsophisticated investors. They also included sales to customers made contemporaneously with changes to those customers’ investment profiles, including their liquid net worths and/or risk tolerances, which resulted in sales to customers for whom, without those changes, the customers were not eligible to purchase the limited partnerships. Upon learning of these red flags, instead of reasonably investigating to confirm that the products were suitable for these customers, Lerner approved such sales without further inquiry.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $600,000.00 on May 04, 2021.
Unsuitability, misrepresentation/omission, breach of fiduciary duty
FINRA BrokerCheck shows a settled customer complaint with a damage request of $100,000.00 on October 27, 2020.
Unsuitability, misrepresentation/omission in connection with SOAEX and Energy 12
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. This standard applies when brokers make recommendations to retail customer for any securities transaction or investment strategy involving securities, including recommendations of types of accounts.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest. There are different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.
Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest. Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Lerner has been in the securities industry for more than 38 years. Lerner has been registered as a Broker with David Lerner Associates, INC. since 1994.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.