It is alleged that Long Island-based David Lerner Associates, Inc. (DLA) charged excessive markups on municipal bond and collateralized mortgage obligation (CMO) transactions over a two-year period. This caused the firm's retail customers to pay unfairly high prices and receive lower yields than they otherwise would have received. DLA has been fined $2.3 million for the markup and related supervisory violations, and ordered the firm to pay restitution of more than $1.4 million, plus interest, to affected customers. The panel also fined DLA's head trader $200,000 and suspended him for six months from the securities industry. The ruling resolves charges brought by FINRA's Department of Enforcement in May 2010.
FINRA Hearing Panel Fines David Lerner Associates $2.3 Million for Selling Municipal Bonds, CMOs to Retail Customers at Unfair Prices, and for Supervisory Violations