Erez Law is currently investigating David Lerner Associates, Inc. (CRD# 5397) financial advisors regarding recommendations for investments in Puerto Rico bonds to its clients across the country. The Miami based law firm believes that David Lerner Associates brokers sold unsuitable Puerto Rico bonds to its customers across the country. David Lerner Associates, Inc. has offices in New York, Delaware, and Florida.
According to several sources, David Lerner Associates conducted seminars in which it touted the benefits of investing in Puerto Rico bonds. Many brokers and brokerage firms aggressively touted Puerto Rico bonds due to their tax advantages. They are triple tax free – free from federal, state and municipal taxes. Unfortunately, their degrading credit quality was often overlooked.
Puerto Rico suffers from long-term financial and economic deficiencies that rendered its credit increasingly more speculative. The deterioration of Puerto Rico’s financial condition culminated in its debt being downgraded to junk status or speculative (below investment grade). For the past several years, Puerto Rico has been struggling with compounding debt and economic decline. As a result, the value of Puerto Rico’s municipal tax-free bonds has considerably fallen. Since September 2013, when the steep decline in Puerto Rico bond values began, investors holding these bonds have suffered massive losses.
A broker must have reasonable grounds for each recommendation made to investors considering such factors as the customer’s other securities holdings, financial situation, and risk tolerance. In addition, before a firm offers a security to its customers, the firm must conduct due diligence, investigating the facts surrounding the security, to confirm that it is suitable for any customer of the firm. The suitability of an investment for a particular individual is at the center of the investment process and one of the key fiduciary duties owed by a firm and its broker to the customer. A firm may be held liable for its failure to recommend suitable investments to its customers.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, David Lerner Associates, Inc. may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States and Puerto Rico for claims against brokerage firms who recommended investments in Puerto Rico bonds and closed-end funds.
Erez Law represents investors in the United States and Puerto Rico for claims against David Lerner Associates, Inc. financial advisors who made recommendations for investments in Puerto Rico bonds. If you were a client of David Lerner Associates, Inc. or another firm, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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