Syosset broker fined; payback ordered

A financial-industry regulatory panel has ruled against a Syosset broker, fining it $2.3 million and ordering that it pay back $1.4 million to overcharged customers, a finding that the company disputes.

In yesterday's rulings against David Lerner Associates Inc., a Financial Industry Regulatory Authority hearing panel found that the company inflated markups on client investments and failed to properly supervise its sales force.

The FINRA panel also fined the company's head trader, William Mason, $200,000 and suspended him for six months from the securities industry.

David Lerner Associates general counsel Joseph C. Pickard said the company plans to appeal and looks "forward to vindication at a fair and impartial hearing."

The firm "believes that the current Hearing Panel's ruling is simply wrong, completely ignores the relevant facts and fails to follow the law," Pickard said in a statement. Mason, too, will appeal, the attorney said.

The ruling becomes final in 45 days unless there is an appeal to the authority's national adjudicatory council.

In its rulings, the FINRA panel said the company "charged excessive markups on municipal bond and collateralized mortgage obligation [CMO] transactions over a two-year period, causing the firm's retail customers to pay unfairly high prices and receive lower yields than they otherwise would have received."

FINRA last year filed a separate complaint against Lerner Associates, charging it with misrepresenting an investment called Apple REIT Ten -- a $2-billion real estate investment trust -- and for "targeting unsophisticated and elderly customers," FINRA said in a release at the time.

The company said it denies the claims and will defend itself against FINRA's accusations in the REIT complaint.