David Lerner Associates Inc., once known for its New York-area radio ads selling municipal bonds, reported in a recent filing with the Securities and Exchange Commission that its financial condition continued to decline last year, with its negative net worth increasing 29.4%, or $5 million, compared to the prior year.
The firm in its 2019 audited financial statement, known as a Focus report, stated a “negative net worth,” meaning its liabilities are greater than assets, of $22 million at the end of 2019, up from $17 million in 2018.
According to the Focus report, which was filed with the SEC in March but did not appear on the Commission’s website until recently, the company’s principal stockholder, David Lerner, is continuing to provide financing for the broker-dealer.
The firm did not report income or revenue for 2019.
David Lerner Associates recently received an unqualified or clean report from its accountant, noted spokesperson Jake Mendlinger in an email.
“The deficit indicated in the financials is offset by subordinated loans that qualify as regulatory capital,” he wrote. “DLA’s ownership is committed to maintaining the financial viability of the firm. We are optimistic about the company’s future.”
According to its website, the firm has $4.5 billion in client assets and six branches in the Northeast and Florida.
David Lerner Associates was once well known in the New York area for radio ads that practically blanketed the airwaves and asked prospective investors to “Take a tip from Poppy,” referring to Mr. Lerner, who promoted municipal bonds.
In 2012, the Financial Industry Regulatory Authority Inc. ordered the firm to pay more than $3.7 million in fines and restitution for overcharging retail customers on sales of more than 1,500 municipal bonds and 1,700 collateralized mortgage obligation transactions.
A year later, Finra ordered the firm to pay $12 million in restitution to clients who had purchased shares of a nontraded REIT called Apple REIT 10. Finra also fined Lerner more than $2.3 million for charging unfair prices on municipal bonds and collateralized mortgage obligations.
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