David Lerner Associates Fined $2.3M; Head Trader Suspended

by: Jonathan Hemmerdinger

Wednesday, April 4, 2012

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WASHINGTON — A Financial Industry Regulatory Authority hearing panel has fined Syosset, N.Y.-based David Lerner Associates Inc. $2.3 million and suspended head trader William Mason for six months with a $200,000 fine for charging excessive markups on municipal bond and collateralized mortgage obligation transactions over a two-year period.

The panel also ordered the firm to pay more than $1.4 million, plus interest, in restitution to affected customers, according to a FINRA release issued Wednesday.

Between 2005 and 2007, David Lerner and Mason charged excessive markups on more than 1,500 muni-bond transactions and 1,700 collateralized mortage obligations transactions, the hearing panel found.

The markups caused retail customers to pay unfairly high prices and receive lower yields, FINRA said.