(
)
(
)
No more tips from “Poppy”!
Long Island investment honcho David Lerner, known for his radio ads inviting investors to “Take a tip from Poppy,” was banned from the securities industry for a year after regulators said he duped elderly customers into buying shoddy real-estate investments.
The ban also means that his ubiquitous ad spots, known throughout the tri-state area, will disappear as well.
In a scathing 78-page complaint and settlement agreement, the Financial Industry Regulatory Authority blasted Lerner and his brokerage firm, David Lerner Associates, for pushing “unsophisticated and elderly customers” to buy real-estate investment trusts using misleading facts and performance data.
Wall Street’s self-regulatory agency also slammed the firm for overcharging investors for municipal bonds.
The Syosset-based firm, which Lerner founded in 1976, was ordered to pay a whopping $14.3 million, including $12 million to jilted customers.
Lerner, 76, was suspended from the securities industry for a year, followed by a two-year suspension from acting as a principal of his brokerage firm. He was also fined $250,000.
“It’s embarrassing,” said Chicago securities lawyer Andrew Stoltmann, who represents the brokerage clients. “David Lerner personally was whacked, which tells you it goes to the highest levels of the firm.”
Joseph Pickard, the brokerage’s general counsel, said the firm settled in a bid “to move the company past these distractions.”
According to Finra, Lerner persuaded thousands of customers to buy the firm’s Apple real-estate investment trusts, calling them a “fabulous cash cow.”
Finra said Lerner exaggerated the past performance of earlier Apple REITs at seminars in New York and Florida to entice customers to invest in the latest trust, Apple REIT 10.
Previous Apple REITs held assets that had lost value during the financial crisis, but the manager of the trusts never marked them down.
Despite repeated warnings from Finra not to rely on the earlier REITs to sell the new one, Lerner touted past performance as proof that it would be a huge success, the regulator said.
At a seminar in Great Neck, LI, in July 2011, Lerner described earlier REITs as “something where no one has ever lost money,” which was patently false, the agency said.
“We are the Rolls-Royce of this business,” he told attendees at a Boca Raton, Fla., conference, according to the Finra order.
Sales of the REITs accounted for as much as 70 percent of the firm’s business since 1996, the agency said.
John Dempsey, a 33-year veteran of the firm, will take over the daily operations. Lerner will move to the non-brokerage side of the business, Pickard said.
“I am thankful for the tens of thousands of investors who have remained steadfast and loyal to David Lerner Associates,” Lerner said in a statement. “Most of all, I am confident that the future remains bright.”