The arbitration claim also alleges that David Lerner Associates and its broker, Robert Rasbach, misrepresented and omitted material information about the investment strategy and the energy investments, including:

• That investing in Energy 11 and Energy 12 involved a “high degree of risk” and was only appropriate for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”
• Energy 11 and Energy 12 were risky energy start-ups that were run by individuals with no experience in the oil and gas industry who were “wildcatting,” or drilling for oil and natural gas in unproven areas that have no concrete historical production, with its success tied to the energy industry and the ability of the partnerships to engage in a “liquidity event.”
• Energy 11 and Energy 12 were “blind pool” investment vehicles that put very few restrictions on what and how they could invest.
• The risks related to concentrating a significant portion of their portfolios into the volatile and risky energy sector.

Customers of David Lerner Associates, Inc. that have purchased proprietary energy-related securities from David Lerner, including Energy 11 and SOAEX, should contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

Energy 11, Energy 12, and SOAEX

Energy 11 and Energy 12 are illiquid and high-risk limited partnerships that were sold exclusively by David Lerner Associates. Each limited partnership was formed to acquire and develop oil and gas properties. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition.

Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested.

According to the Energy 11 and Energy 12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”

Energy 11 suspended distributions to its limited partners in March 2020 before resuming them at a reduced rate in late 2021. Energy 11 accumulates unpaid distributions based on an annualized return of seven percent (7%), and all accumulated unpaid distributions are required to be paid before a final payout can occur. As of December 31, 2022, the unpaid payout accrual for the period from March 2020 through November 2021 totaled $2.387671 per common unit, or approximately $45 million.

In addition, as of Energy 11’s most recent 10-Q filing with the SEC, the limited partnership had $20.38 million in total liabilities for the quarter ended June 30, 2023.

The following is a summary of Energy 11’s current liabilities, including accrued unpaid distributions:

• Total Liabilities: $20.38 million
• Unpaid Accrued Distributions: $45 million
• Total Liabilities 45+ Unpaid Accrued Distributions: $65.38 million.

The Spirit of America Energy Fund (SOAEX) is a mutual fund created for customers of David Lerner Associates that invests 80% of its net assets in energy and energy-related companies. The Spirit of America Energy Fund primarily invests in energy-related entities such as exploration, production, and transmission companies, as well as Master Limited Partnerships (“MLPs”). The fund’s investment objective is to provide investors with long-term capital appreciation and current income. SOAEX’s stock price has plummeted since 2015.

David Lerner Associates, Inc.

David Lerner Associates, Inc. is an SEC-registered broker-dealer and FINRA member with six branch offices in New York, Connecticut, New Jersey, and Florida. David Lerner is notorious in the securities industry and has been sanctioned numerous times by securities regulators, including censures, injunctions, monetary fines, and restitution orders.

David Lerner Associates was the exclusive dealer-manager for Energy 11 and received 6% in selling commissions. David Lerner Associates is also entitled to a contingent incentive fee of up to an amount equal to 4% of gross proceeds of units sold. Based on public disclosures, it appears that David Lerner Associates has received over $22 million in seller commissions for selling Energy 11 to its customers and is potentially entitled to an additional $15 million in contingent incentive fees.

FINRA has brought numerous actions against brokers and supervisors who sold or supervised the sale of David Lerner Associates’ proprietary energy-sector securities. Those include:

• FINRA v. Abbe Jan Wollins, AWC No. 2019063686205 (June 20, 2023)
  • “Between August 2015 and April 2018, while associated with [David Lerner Associates], Willins recommended that two customer accounts invest in limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Wollins violated FINRA Rules 2111 and 2010.”
  • “Customers A and B were a retired married couple who held an investment account with DLA. In August 2015, when Wollins recommended that they invest in an illiquid limited partnership, Customers A and B were approximately 82, retired, and receiving pension and social security benefits and savings. Between August 2015 and December 2016, at Wollins’ recommendation, Customers A and B invested a total of $128,907 in one of the limited partnerships. Wollins also recommended that senior Customer C invest $25,000 in one of the limited partnerships. At the time of his investment, Customer C was 93 and, received social security benefits, and took required withdrawals from an IRA. Customer C understood that his investment in the limited partnership would supplement his monthly income with these returns. Wollins’ recommendations that Customers A, B, and C invest in the energy partnerships were not suitable given their investment profiles. Wollins received $2,448.30 in commissions from these investments.”
• FINRA v. Rande Aaronson, AWC No. 2019063686204 (May 30, 2023)
  • “From January 2015 through October 2019, branch manager Aaronson failed to reasonably supervise sales of two illiquid oil and gas limited partnerships, Energy 11, L.P. (E11) and Energy Resources 12, L.P. (E12), to ensure that the sales were suitable for customers given their investment profiles, as required by FINRA Rule 2111 and the firm’s policies and written supervisory procedures (WSPs). Therefore, Aaronson violated FINRA Rules 3110 and 2010.”
  • “E11 and E12 are illiquid limited partnerships that registered representatives at DLA sold to their customers. Each limited partnership was formed to acquire and develop oil and gas properties. Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested. According to the E11 and E12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment” (emphasis added).
  • “The firm’s WSPs also included a policy specific to a customer’s change of their risk tolerance, as reflected on each customer’s Suitability Profile. The policy prohibited changes to a customer’s risk tolerance solely for the purpose of qualifying the account to engage in a certain transaction. Branch managers had the supervisory responsibility to review Suitability Profiles, to assess the appropriateness of any risk tolerance changes on Suitability Profiles, and to accept and sign Suitability Profiles.”
• FINRA v. Russ Kory, AWC No. 2019063686203 (September 2, 2022)
  • “Between August 2015 and September 20 19, while associated with David Lerner Associates, Kory recommended that three firm customers invest in the firm’s proprietary limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Kory violated FINRA Rules 2111 and 2010.”
  • “Each limited partnership was formed to acquire and develop oil and gas properties located onshore in the United States. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition. The partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, to engage in a liquidity event. Each limited partnership’s ability to make return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the properties in which the partnerships invested. Additionally, according to the prospectuses, investments in the partnerships involve a “high degree of risk” (emphasis added).
• FINRA v. Jeffrey D. Basford, AWC No. 2019063686202 (August 15, 2022)
  • “During the course of a FINRA investigation into potential unsuitable sales of proprietary energy products at the firm, Basford declined to appear for on-the-record testimony requested pursuant to FINRA Rule 8210.”
• FINRA v. Charles Bonilla, AWC No. 2020067626001 (February 8, 2021)
  • “Between December 2015 and December 2017, while associated with David Lerner Associates, Bonilla recommended that his customers invest in energy sector securities without having a reasonable basis to believe those investments were suitable. Due to Bonilla’s failure to conduct reasonable diligence, there were potential risks and costs of the investments, among other things, that Bonilla did not adequately understand. Accordingly, Bonilla violated FINRA Rules 2111 and 2010.”
  • “The fund’s holdings are concentrated in energy-related securities, and the fund’s performance is largely dependent on the condition of the energy industry.”

About Iorio Altamirano LLP

Iorio Altamirano LLP is investigating claims on behalf of David Lerner Associates’ customers who purchased Energy 11 and SOAEX.

To read more about the investigation, please click on the following links:

Energy 11, L.P. and Energy Resources 12 L.P.: How to Recover Investment Losses from David Lerner Associates, Inc.

Investor Update: Energy 11, L.P.’s Substantial Debt and Missed Accrued Distributions Could Take Years to Pay Off

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have suffered investment losses, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

On November 5, 2011, the Chairman and Chief Executive Officer of Energy 11 GP, LLC, the general partner of Energy 11, L.P. (“Energy 11”), sent a letter to investors of Energy 11 notifying them that partial distributions would resume after a nearly two-year hiatus. The amount of the distribution will be 50% of the regular monthly distribution.

In March 2020, Energy 11 suspended monthly distributions to its limited partners as the partnership took on massive debt. Unbeknownst to many investors, the distributions were merely a return of the limited partner’s original capital investment, not a dividend. Energy 11 currently owes 21 months of unpaid distributions to its limited partners, totaling approximately $42 million.

According to Energy 11’s latest 10-Q filing with the SEC, Energy 11 had $44.48 million in total liabilities as of September 30, 2021. The regulatory filing also disclosed that during October and November 2021, Energy 11 made principal payments of $7 million to pay down the balance on its BF Credit Facility from $34 million to $27 million. As a result of the disclosed principal payments, it is estimated that Energy 11 currently has approximately $37.5 million in total outstanding liabilities.

Between missed distributions to limited partners ($42 million) and total current estimated liabilities ($37.5 million), Energy 11 needs approximately $79.5 million to pay off its debt and make all past-owed distributions to limited partners.

In addition, Energy 11 needs more than $2 million a month, or $6 million a quarter, to make regular monthly distributions based on a 7% annualized distribution rate. According to the November 5^th investor letter, Energy 11 hopes to resume its regular monthly distribution in December 2021.

Additionally, Energy 11’s most recent unaudited financial statements filed with the SEC disclosed that the partnership had a net income of $7 million for the third quarter of 2021.

What does that mean for Energy 11 investors?

If Energy 11’s net income remains $7 million each quarter (which is a big if in the volatile energy sector) and the partnership needs $6 million each quarter to make future scheduled distributions, it will have approximately $1 million in excess cash each quarter. That is $4 million in excess cash per year to pay down its debt and catch up on past distributions.

With $79.48 million in outstanding debt and past-owed distributions, it would take Energy 11 nearly 20 years to draw level under this scenario.

Bottom line, although regular monthly distributions may resume in December 2021, it will likely take Energy 11 years of good fortune to pay down its debt and make past owed distributions to limited partners.

Customers of David Lerner Associates, Inc. that have purchased Energy 11 should contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

David Lerner Associates, Inc.

David Lerner Associates, Inc. (“David Lerner Associates”) is facing numerous customer complaints about its sale and marketing of Energy 11, L.P. The complaints allege that Energy 11, an illiquid non-traded limited partnership that invests in the volatile energy sector, was unsuitable for investors with modest financial means, low or moderate risk tolerance, and liquidity needs. The complaints also include allegations that David Lerner Associates and its financial advisors misrepresented material features and risks associated with these illiquid, concentrated, and high-fee products, as well as ongoing misrepresentations related to when distribution payments would resume.

David Lerner Associates was the exclusive dealer-manager for Energy 11 and received 6% in selling commissions. David Lerner Associates is also entitled to a contingent incentive fee of up to an amount equal to 4% of gross proceeds of units sold. Based on public disclosures, it appears that David Lerner Associates has received over $22 million in seller commissions for selling Energy 11 to its customers and is potentially entitled to an additional $15 million in contingent incentive fees.

Iorio Altamirano LLP is investigating claims on behalf of David Lerner Associates’ customers that purchased Energy 11. To read more about the investigation, 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.

David Lerner Associates has also received several customer complaints about brokers’ recommendations to purchase the Spirit of America Energy Fund (SOAEX). To read more about the Spirit of America Energy Fund, please click on the following link: Spirit of America Energy Fund (SOAEX): 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

If a broker at David Lerner Associates recommended Energy 11 to you, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential consultation. Customers may be entitled to compensation without paying any out-of-pocket fees or costs through a contingency fee arrangement with securities arbitration law firm Iorio Altamirano LLP.

• Energy 11 has not made distributions to its limited partners since March 2020.
• Energy 11 owes its limited partners 18 months of unpaid distributions, totaling more than $36 million.
• On May 13, 2021, Energy 11 entered into a new loan agreement, borrowing approximately $40 million.
• According to the terms of the loan, Energy 11 is not allowed to make any distributions to limited partners until the loan balance is paid down from its current balance of $39 million to $30 million (representing one half of its current maximum borrowing amount of $60 million).
• Energy 11 is required to make a monthly payment of $1 million to pay down the loan’s principal. According to the firm’s most recent financial statements, based on its cash flow over the first six months of 2021, Energy 11 does not appear to be able to afford to pay down the loan balance any quicker.
• Even when Energy 11 does pay down the loan balance and is contractually able to resume distributions, Energy 11 is not required to resume distributions at that time.
• Energy 11’s debt has tripled since the end of 2018, whereas its assets have remained relatively stable.
• Based on the amount of Energy 11’s outstanding debt, unpaid distributions, and recent cash flow, investors are not likely to receive distributions anytime soon.

Customers of David Lerner Associates, Inc. that have purchased Energy 11 should contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

Energy 11, L.P.

Energy 11 is an illiquid, non-traded limited partnership sold as private placement security by David Lerner Associates, Inc. The limited partnership invests in the oil, gas, and energy sector, which has been extremely volatile the past several years. Energy 11 is not suitable for most conservative or retired investors.

Energy 11 sought to acquire interests in both producing and non-producing oil and gas properties located onshore in the United States. In other words, Energy 11 was speculating that non-producing leaseholds would eventually produce.

In March 2020, Energy 11 suspended distributions to its limited partners. Energy 11 currently owes 18 months of unpaid distributions to its limited partners, totaling more than $36 million.

However, pursuant to the terms of Energy 11’s latest loan agreement, Energy 11 cannot make any distributions until the loan is paid down to one-half of the account maximum borrowing amount of $60 million. The loan balance as of July 31, 2021, was $39 million. Accordingly, Energy 11 cannot resume distributions to investors until it pays down its current loan balance by $9 million, from $39 million to $30 million.

Energy 11 is required to make a monthly payment of $1 million to pay down the principal of the loan.

[On May 13, 2021, Energy 11 entered into a new $60 million revolving credit facility with BankFirst. At closing, the Partnership borrowed approximately $40 million. The proceeds were used to pay the $40 million outstanding balance and accrued interest on the Partnership’s prior loan arrangement. Any further advances under the revolving credit facility with BankFirst are to be used to fund capital expenditures for the development of the Partnership’s undrilled acreage. The revolving credit facility with BankFirst is secured by a mortgage and first lien position on at least 90% of the Partnership’s producing wells.]

Energy 11’s August 6^th letter to investors stated that the Partnership intends to pay down the loan balance from excess monthly cash flow. However, Energy 11 might not have enough excess cash flow to pay much more than the monthly minimum required amount of $1 million. According to Energy 11’s latest 10-Q filing with the SEC, the Partnership’s net cash flow from operating and investing activities for the first six months of 2021 was approximately $9.5 million, or an average of $1.58 million each month.

Based on Energy 11’s most recent financial statements and its cash flow over the first six months of 2021, Energy 11 does not appear to be able to afford to pay down the loan balance any quicker. Consequently, it is possible that Energy 11 will not be able to resume distributions for another 8 to 9 months.

Even when Energy 11 does pay down the loan balance and is contractually able to resume distributions, Energy 11 is not required to resume distributions at that time.

After paying down its loan balance, will Energy 11 be able to afford to pay back investors? The answer to that remains uncertain. However, the Partnership’s financials are not likely to give investors much confidence.

For starters, for each month that passes without the payment of distributions, the amount owed to limited partners, which was about $36 million at the end of June 2021, will likely grow by an additional $2.25 million.

In addition, over the past two and a half years, the Partnership’s debt has exploded. In contrast, the Partnership’s assets and revenues have not. From the end of 2018 through June 2021, Energy 11’s debt has tripled from approximately $17.5 million to around $53.5 million. While the Partnership’s liabilities have increased over 300%, the Partnerships’ assets only increased by approximately 5%, from about $323 million on December 31, 2018, to about $341 million on June 30, 2021.

Even assuming that Energy 11 gets back to 2018 income levels by 2022 ($18.6 million / year) (which one could argue is a generous assumption), it appears that it is going to take the Partnership years of good fortune to be able to pay down its debt, resume regularly scheduled distribution, and make past owed distributions to limited partners.

David Lerner Associates, Inc.

David Lerner Associates, Inc. (“David Lerner Associates”) is facing numerous customer complaints related to its sale and marketing of Energy 11, L.P. The complaints allege that Energy 11, an illiquid non-traded limited partnership that invests in the volatile energy sector, was unsuitable for investors with modest financial means, low or moderate risk tolerance, and liquidity needs. The complaints also include allegations that David Lerner Associates and its financial advisors misrepresented material features and risks associated with these illiquid, concentrated, and high-fee products, as well as ongoing misrepresentations related to when distribution payments would resume.

David Lerner Associates was the exclusive dealer-manager for Energy 11 and received 6% in selling commissions. David Lerner Associates is also entitled to a contingent incentive fee of up to an amount equal to 4% of gross proceeds of units sold. Based on public disclosures, it appears that David Lerner Associates has received over $22 million in seller commissions for selling Energy 11 to its customers and is potentially entitled to an additional $15 million in contingent incentive fees.

Iorio Altamirano LLP is investigating claims on behalf of David Lerner Associates’ customers that purchased Energy 11. To read more about the investigation, 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.

David Lerner Associates has also received several customer complaints related to brokers’ recommendations to purchase the Spirit of America Energy Fund (SOAEX). To read more about the Spirit of America Energy Fund, please click on the following link: Spirit of America Energy Fund (SOAEX): 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

If a broker at David Lerner Associates recommended Energy 11 to you and you have suffered investment losses, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential consultation. Customers may be entitled to compensation without paying any out-of-pocket fees or costs through a contingency fee arrangement with securities arbitration law firm Iorio Altamirano LLP.

Martin Lerner has been the subject of six customer complaints, which include one pending dispute and five resolved disputes that ended with monetary compensation being paid to a customer. The pending dispute is a securities arbitration claim filed by a customer against Martin Lerner and David Lerner Associates concerning energy-sector securities. The customer alleged that the recommendations to invest in Energy 12 L.P., an illiquid, non-traded limited partners, and Spirit of America Energy Fund (SOAEX), an energy mutual fund, were unsuitable. The customer also alleged that Martin Lerner made material misrepresentations or omissions regarding both energy-sector securities.

If you have invested in Energy 11, Energy 12, SOAEX, or lost money with broker Martin Lerner or David Lerner Associates, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

David Lerner Associates, Inc.

David Lerner Associates, Inc. is an SEC-registered broker-dealer and FINRA member with branch offices in White Plains, NY; Westport, CT, Lawrenceville, NJ; Syosset, NY; and Boca Raton, FL.

Martin Lerner appears to be the only broker located at David Lerner’s branch office in Boca Raton, Florida.

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.

Iorio Altamirano LLP recently filed a securities arbitration claim against David Lerner related to unsuitable recommendations made by President and CEO Martin Walcoe.

Energy Resources 12 L.P. and Spirit of America Energy Fund (SOAEX)

David Lerner Associates, Inc. (“David Lerner Associates”) is facing numerous customer complaints related to its sale of Energy 11, L.P. (“Energy 11”) and Energy Resources 12, L.P. (“Energy 12”). The complaints allege that Energy 11 and Energy 12 were not suitable investments and that David Lerner Associates failed to supervise the sales and marking of the investments. The complaints also include allegations that David Lerner Associates and its financial advisors misrepresented material facts rattling to the risks associated with these illiquid, concentrated, and high-fee products.

Energy 11 and Energy 12 are illiquid, non-traded limited partnerships sold as private placement securities. The limited partnerships invest in the oil, gas, and energy sector, which has been extremely volatile the past several years. Energy 11 and Energy 12 were not suitable for most conservative or retired investors.

Investors have reported that Energy 11 has failed to make any dividend payments since January 2020.

To read more about Energy 11 and Energy 12, 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.

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 $14.50 per share in mid-May 2021. Class C shares of Spirit of America Energy Fund (NASDAQ: SACEX) have declined from over $47 per share in January 2017 to around $13.50 per share in early mid-May 2021.

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.

To read more about the Spirit of America Energy Fund, click on the following link: Spirit of America Energy Fund (SOAEX): How to Recover Investment Losses From David Lerner Associates, Inc.

Financial Advisor Martin Lerner (CRD No. 1255769)

Martin Lerner has 35 years of experience in the securities industry and has been associated with the following brokerage firms:

• David Lerner Associates, Inc., from 1994 – the present.
• David Lerner Associates, Inc., from 1980 – 1988.
• First Investors Corporation, from 1979 – 1980.

At David Lerner Associates, Martin Lerner has been the subject of six customer complaints:

• Customer Dispute (October 2020): A customer alleged $100,000 in damages resulting from unsuitable investment recommendations concerning Energy 12 L.P. and Spirit of America Energy Fund (SOAEX). The customer also alleged that Martin Lerner made material misrepresentations or omissions regarding both energy-sector securities. The dispute is pending.
• Customer Dispute (July 2013): A customer filed a securities arbitration complaint alleging $160,424 in damages related to a real estate security. The matter was settled by the firm for monetary compensation.
• Customer Dispute (June 2013): A customer filed a securities arbitration complaint alleging $92,181 in damages related to a real estate security. The matter was settled by the firm for monetary compensation.
• Customer Dispute (May 2013): A customer filed a securities arbitration complaint alleging $431,622 in damages related to APPLE REIT investments. The matter was settled by the firm for monetary compensation.
• Customer Dispute (May 2010): A customer filed a lawsuit in Nassau County, New York, alleging fraud, forgery, misrepresentation, and breach of contract connected with a 2001 replacement of an insurance policy. The matter was settled by the firm for monetary compensation.

Martin Lerner claims that he was named in the 2013 disputes solely because his name “appears on Form BD.”

In 2006, Martin Lerner and FINRA entered into an Acceptance, Wavier & Consent agreement that resulted in a fine and 20-day suspension. The sanctions arose after FINRA alleged that Margin Lerner was functioning as a principal of the firm without being properly registered in that capacity. FINRA also alleged that Martin Lerner failed to comply with New York State Insurance Department Regulation No. 60 and failed to supervise the firm’s employees with a view towards preventing violations of the regulation. The regulation is related to the sale of life insurance and variable annuities.

David Lerner Associates, Inc. – Supervisory Duties

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.

How to Recover Financial Losses or Obtain a Free Consultation

If you or a loved one were a customer of Martin Lerner or David Lerner Associates 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 (646) 330-4624 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.

Can I Sue My Financial Advisor Over Losses?

Yes, you can sue your financial advisor or broker to recover investment losses if the broker did not have your best interest in mind when they made an investment recommendation or offered investment advice. You can also sue your financial advisor or broker if the financial advisor misrepresented or omitted material facts that an investor should have known about the security or investment strategy.

However, the dispute likely will not be litigated in a court of law. Instead, it will be contested in arbitration.

What is Securities Arbitration?

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 in an effort to be compensated. Arbitration, an alternative dispute resolution process, is the primary forum for resolving disputes between investors and brokerage firms because the client agreement, which the customer signs at account opening, contains a mandatory arbitration clause. To read more about securities arbitration, click here.

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.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

Can You Sue Someone for a Bad Investment?

The short answer is “yes” if your advisor did not act in your best interest connected with an investment-related recommendation.

When a broker-dealer makes an investment recommendation, or a registered investment adviser provides investment advice, the investor is entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that is in the best interest of the investor, and that does not place the interest of the financial professional or financial institution ahead of the interests of the retail investors.

The “best interest” standard is not limited to “recommendations” to purchase a security. It also applies to recommendations to sell or hold a security. Additionally, it applies to recommendations to purchase, sell, or hold an investment strategy. Finally, the “best interest” standard also explicitly applies to recommendations of types of accounts, including brokerage accounts and investment advisory accounts.

What is Excessive Trading or Churning?

Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer, but to generate commissions for the broker.

Churning is a more egregious variation of excessive trading. Churning refers to a situation where the broker executed an excessive number of trades and did so with the intent to defraud or reckless disregard for the customer’s interest. Churning is an unethical and illegal practice. It is also a violation of securities rules and regulations and can cause enormous harm to customers.

Excessive trading and churning are unethical and illegal practices. They are also violations of securities rules and regulations and can cause enormous harm to customers.

How Do I Sue an Investment Firm?

Brokerage firms 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.

If you believe you have a claim, you should contact experienced securities arbitration attorneys at Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

How Much Do Securities Arbitration Attorneys Charge?

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.

Iorio Altamirano LLP generally represents investors through a contingency fee arrangement, which means that if we do not obtain a recovery, we do not collect a fee*.

*We do not collect a fee unless we obtain a recovery via settlement or judgment. You may, however, be responsible for costs and expenses the firm has advanced according to the terms of your agreement with the firm. The firm may recover advanced costs and expenses by deducting the expense from the gross recovery of any settlement or judgment.

See also:

Energy 11, L.P. and Energy Resources 12 L.P.: How to Recover Investment Losses from David Lerner Associates, Inc.

Spirit of America Energy Fund (SOAEX): How to Recover Investment Losses From David Lerner Associates, Inc.

Original Post:

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

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.

If you have lost money with broker Daniel T. Lerner or David Lerner Associates, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

David Lerner Associates, Inc.

David Lerner Associates, Inc. is an SEC-registered broker-dealer and FINRA member with branch offices in White Plains, NY; Westport, CT, Teaneck, NJ; Syosset, NY; Princeton, NJ; and Boca Raton, FL.

David Lerner’s branch office in White Plains, NY, currently has 27 registered brokers.

Iorio Altamirano LLP recently filed a securities arbitration claim against David Lerner related to unsuitable recommendations made by President and CEO Martin Walcoe.

Financial Advisor Daniel Todd Lerner (CRD No. 1255769)

Mr. Daniel T. Lerner has 35 years of experience in the securities industry and has been associated with the following brokerage firms:

• David Lerner Associates, Inc. in Whites Plains, New York, from September 2000 – the present.
• Prudential Securities Incorporated in New York, New York, from February 2000 – August 2000.
• Charles Schwab & Co., Inc. in San Francisco, California, from November 1999 – January 2000.
• L. Stern & Co., LLC in Beverly Hills, California, from June 1999 – November 1999.
• Bear, Stearns & Co. Inc in New York, NY from February 1999 – May 1999.
• SSH Securities, Inc. in Syosset, NY from May 1998 – February 1999.
• David Lerner Associates, Inc. from March 1985 – February 1999.

Since returning to David Lerner, Mr. Daniel T. Lerner has been the subject of seven customer complaints:

• Customer Dispute (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). The customer did not file a securities arbitration complaint. Instead, the customer complained directly to David Lerner, and the firm denied the complaint.
• Customer Dispute (October 2020): Customers with a joint account alleged $170,000 in damages resulting from what appears to be unauthorized transactions in February 2017 related to Energy 11 L.P. The customers did not file a securities arbitration complaint. Instead, the customers complained directly to David Lerner, and the firm denied the complaint.
• Customer Dispute (October 2020): A customer alleged unsuitability, misrepresentation, fraud, and breach of conduct in connection with a recommendation regarding Energy 11 L.P. The dispute is still pending.
• Customer Dispute (July 2020): A customer alleged $175,000 in damages resulting from unsuitable investment recommendations concerning Energy 11 L.P., Great Art Fund, and a mutual fund. The customer also alleged misrepresentation and breach of fiduciary duty. The dispute is still pending.
• Customer Dispute (April 2019): A customer alleged unsuitability, misrepresentation/omission, breach of fiduciary duty, and failure to supervise in connection with recommendations regarding Energy 11 L.P., Great Art Fund, a mutual fund, and an insurance product. The dispute is still pending.
• Customer Dispute (August 2016): A customer alleged misrepresentations from August 2015 to August 2016 in connection with a mutual fund recommendation. The customer did not file a securities arbitration complaint. Instead, the customer complained directly to David Lerner, and the firm denied the complaint.
• Customer Dispute (March 2003): A customer alleged that an ACAT Form was incorrectly marked “liquidate and transfer” by David Lerner. The account was liquidated by another firm, which refused to reverse the trades. The customer did not file a securities arbitration complaint. Instead, the customer complained directly to David Lerner, and the firm denied the complaint.

Mr. Daniel T. Lerner has denied any wrongdoing.

David Lerner Associates, Inc. – Supervisory Duties

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.

How to Recover Financial Losses or Obtain a Free Consultation

If you or a loved one were a customer of Mr. Daniel T. Lerner or 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 (646) 330-4624 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.

FINRA suspended Mr. Bonilla for recommending energy-sector securities to customers without having a reasonable basis to believe those investments were suitable. Mr. Bonilla was a broker with David Lerner Associates, Inc. in Boca Raton, FL when the alleged conduct occurred.

If you have suffered financial losses investing with Mr. Bonilla or suspect that Mr. Bonilla did not have your best interest in mind when recommending investments, including energy-sector mutual funds or limited partnerships, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

FINRA Letter of Acceptance, Waiver, and Consent No. 2020067626001

Charles Bonilla and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on February 8, 2021, over his conduct from December 2015 to December 2017, while employed by David Lerner Associates, Inc. (“David Lerner Associates”). FINRA alleged that Mr. Bonilla recommended that his customers invest in energy-sector securities without having a reasonable basis to believe those investments were suitable. FINRA concluded that Mr. Bonilla did not understand the potential risks and costs of the recommended investments because he failed to conduct reasonable diligence of the securities.

Mr. Bonilla Lacked a Reasonable Basis to Recommend a Proprietary Mutual Fund

According to FINRA, in December 2015 and December 2017, Mr. Bonilla recommended investments in a mutual fund created for customers of David Lerner Associates. During that period, the fund’s investment objective was to provide shareholders long-term capital appreciation and current income. According to the fund’s prospectus, the fund sought to achieve its investment objective by investing at least 80% of its net assets in a combination of securities and other assets of energy and energy-related companies. The fund sought to make monthly distributions to shareholders, which the prospectus states were expected to be a return of capital distributions. The fund’s holdings are concentrated in energy-related securities, and the fund’s performance is largely dependent on the condition of the energy industry.

FINRA specifically alleged:

• Bonilla did not perform reasonable diligence on the fund prior to recommending it to customers.
• Bonilla could describe little about the fund’s underlying holdings, beyond that some of the holdings were “midstream” energy companies.
• Bonilla did not know how the fund paid its monthly distributions. Further, Mr. Bonilla did not know what, if any, diligence David Lerner Associates performed on the fund or its holdings prior to offering shares of the funds to customers.
• Without sufficient understanding of these fundamental features or risks of the fund, Mr. Bonilla recommended that three of his customers collectively invest over $250,000 in the fund.
• Bonilla received $4,355.72 in commissions from these transactions.
• During the period between the fund’s initial offering in July 2014 and December 2015, the fund’s net asset value declined by more than 40%.

Mr. Bonilla Lacked a Reasonable Basis to Recommend a Limited Partnership

According to FINRA, between December 2015 and January 2017, Mr. Bonilla also recommended illiquid investments in a limited partnership sold to customers of David Lerner Associates. This is how FINRA described the limited partnership investment at issue:

Limited partner [investors] invested in the partnership by purchasing common unit ownership interests in the partnership. The limited partnership was formed to acquire and develop oil and gas properties located onshore in the United States. The partnership was a “blind pool,” meaning [that] at the time of the initial offering, the partnership had not identified any properties for acquisition. According to the prospectus, the partnership’s primary objectives included making distributions to limited partners, which could be sourced from operations, offering proceeds, borrowings, and/or return of capital. Additionally, five to seven years after the termination of the offering, the partnership intended to engage in a liquidity transaction in which the partnership would sell its properties and distribute the net sales proceeds to the partners, merge with another entity or list its common units on a national securities exchange. The partnership’s ability to make [a] return of capital distributions to limited partners and engage in a profitable liquidity event was substantially dependent on the performance of the properties in which the partnership invested.

Regarding Mr. Bonilla’s conduct, FINRA specifically alleged:

• Bonilla did not perform reasonable diligence on the partnership prior to recommending the common units to customers.
• Bonilla did not know how the partnership generated funds to pay investors monthly distributions.
• Bonilla did not know how the price of the common units reflected on customer account statements were calculated.
• Bonilla did not read the full prospectus, nor did he review the partnership’s financial statements.
• Without a sufficient understanding of the fundamental features and risks of the partnership, Mr. Bonilla recommended that two of his customers collectively invest over $650,000 in the partnership,
• Bonilla received $18,061.31 in commissions from the transactions.
• In March 2020, the partnership notified its common unit holders that it was suspending distributions until further notice.
• At the time, the customer was 28 years old, in the 15 percent tax bracket, and starting her own business.

Financial Advisor Charles Bonilla (CRD No. 2572107)

Mr. Bonilla has 21 years of experience in the securities industry and has been employed by eight different firms. Since 2008, he has been associated with the following firms:

• Pruco Securities, LLC in Boca Raton, FL, from May 2018 – February 2019.
• David Lerner Associates, Inc. in Boca Raton, FL, from December 2015 – May 2018.
• Scottrade, Inc. in Aventura, FL, from January 2008 – December 2014.

Scottrade, Inc. fired Mr. Bonilla in December 2014, alleging that he engaged in a business activity without receiving proper approval from the firm.

Charles Bonilla also goes by the following names: Charles A. Bonilla, Charles Abad Santos Bonilla, and Charles Abadsantos Bonilla.

David Lerner Associates, Inc.: A Duty to Supervise

Financial institutions, like David Lerner Associates, must properly supervise financial advisors and customer accounts. Brokerage firms are required to establish and maintain a reasonably designed system to oversee account activity, such as transactions in energy-sector securities, 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.

How to Recover Losses or Obtain a Free Consultation

If you have suffered financial losses investing with Charles Bonilla or suspect that Mr. Bonilla did not have your best interest in mind when recommending investments, such as energy-sector mutual funds and limited partnerships, contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP at august@ia-law.com or toll-free at (646) 330-4624 for a free and confidential evaluation of your account.

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