Articles Tagged with David Lerner Associates

shutterstock_182053859-300x200Investment Adviser, Joseph Teifer, currently employed at Herbert J. Sims & Co. Inc., has been subject to at least two customer complaints during the course of his career. Both complaints have recently surfaced in the past year alleging Teifer making inappropriate investments.

According to a BrokerCheck report, in April 2019, two allegations were made against Teifer for making unsuitable recommendations. Both customer disputes were closed by the firm without action being taken.  The first complaint alleges inappropriateness of investments and damages of approximately $19,000 for investments made during 2017-2019. Similarly, as second complaint surfaced for similar allegations alleging damages of approximately $60,000. These complaints appear to relate to mutual fund recommendations made through David Lerner.

Brokers have an obligation to make only suitable recommendations for investments to the client.  There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors.  Brokers should not present these investment options to clients.  There are two screens that brokers must employ to determine whether an investment is suitable for a client.  First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors.  The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short-term goals, age, disability, income needs, or any other relevant factor.

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shutterstock_12144202-300x200According to BrokerCheck records financial advisor Robert Cavanagh (Cavanagh), currently employed by David Lerner Associates, Inc. (David Lerner) has been subject to at least five customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Cavanagh concern allegations of unsuitable investments, breach of fiduciary duty, and fraud.

In July 2018 a customer complained that Cavanagh engaged in unsuitable investments, made misrepresentations, breached his fiduciary duty, was negligent, and committed fraud in connection with Puerto Rico and Rochester Bond Fund.  The customer alleged $100,000 in damages and the claim is currently pending.

In July 2017 a customer alleged unsuitable investments and misrepresentations and omissions of information causing $160,000 in damages.  The claim is currently pending.

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shutterstock_93851422The securities lawyers of Gana Weinstein LLP are investigating investors that were recommended to invest in Spirit of America Energy Fund (Stock Symbol: SOAEX) underwritten and promoted by David Lerner Associates. The Fund went public in July 2014 and since that time has fallen from about $10 to only about $4.33 per share, an over 50% loss in less than a year and half.

The Spirit of America Energy Fund states that its investment strategy “seeks to achieve its investment objective by investing at least 80% of its assets in energy and energy related companies Exploration, production and transmission of energy or energy fuels. The Fund will invest in Master Limited Partnerships (MLPs) that derive the majority of their revenue from energy infrastructure assets and energy related assets or activities…”

In the case of Spirit of America Energy Fund as of May 2015, over 90% of the fund was invested in oil and gas related MLPs. In addition, investors recommended to invest in the fund may have to pay a high 5.75% load fee and 1.55% annual expenses. In addition, from information available on the Spirit of America Energy Fund website, for the year ended 2014, over 93% of distributions received by investors are a return of their capital and only 6% of all distributions was a taxable dividend. Thus, part of the reason that the fund has declined so rapidly may possibly be attributable to the fund simply repaying investors from their own funds rather than through funds generated by investments.

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