FINRA, the Financial Industry Regulatory Authority, sanctioned Marin Lerner. FINRA in a regulatory settlement issued Lerner a fine of $10,000 and suspended Lerner from association with any FINRA member, which would be any registered stockbrokerage, for one month.
Under FINRA and SEC rules, a securities broker may not recommend an investment that is not suitable or otherwise in the best interests of the investor. Supervisors and employers are required to have reasonable supervisory systems to prevent such sales.
Without admitting or denying the findings, Lerner consented to findings that he failed to reasonably supervise unsuitable sales of illiquid, proprietary limited partnerships. He also failed to ensure that the sales were suitable for customers given their investment profiles. The findings stated that Lerner was aware of red flags that such actions occurred but failed to act.
According to FINRA, these red flags included patterns of sales of the illiquid limited partnerships to seniors and unsophisticated investors. Red Flags also included sales to investors 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.
This post is for the purpose of investor education and to discuss recent events in the securities industry. For questions, contact Jeffrey Pederson.
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