David Lerner Associates: Complaints, Regulatory Actions

David Lerner Investors Report Losses in Energy 11 and Energy Resources 12

The White Law Group reviews the regulatory history of David Lerner Associates.

David Lerner Associates (DLA), a Long Island-based brokerage firm, has reportedly  faced increasing scrutiny and regulatory action due to its sales practices involving high-commission, illiquid investments. In particular, many investors have reported significant losses from investments in Energy 11, L.P. and Energy Resources 12, L.P.—two non-traded oil and gas partnerships the firm heavily promoted.

If you are concerned about losses with David Lerner Associates, understanding your options is crucial. Here’s what you need to know.

Energy 11 and Energy Resources 12: What Went Wrong?

Energy 11, L.P. and Energy Resources 12, L.P. were structured as limited partnerships designed to invest in oil and gas production. They were often presented by David Lerner brokers as opportunities for regular income and potential growth tied to the energy market. However, many investors experienced unexpected risks and illiquidity:

• Illiquid Structure: These LPs were not publicly traded, meaning investors could not easily sell or exit the investments. Redemption programs were limited or suspended.
• Volatile Performance: The value of these investments was highly correlated with the unpredictable oil and gas market.
• High Commissions: Brokers received significant upfront commissions—typically 7–10%—which may have influenced sales over investor best interest.
• Valuation Declines: Secondary market pricing for Energy 11 and Energy Resources 12 often reflected steep discounts to original purchase price.

David Lerner advisors allegedly marketed these investments to retirees and conservative investors, many of whom were not suitable candidates due to the high risk and illiquidity.

FINRA Disciplinary Actions and Failure to Supervise

In May 2025, the Financial Industry Regulatory Authority (FINRA) announced a series of disciplinary actions against David Lerner Associates and several of its registered individuals for recommending unsuitable investments in these proprietary, illiquid partnerships to retail customers, including seniors and unsophisticated investors.

From January 2015 through November 2019, David Lerner’s representatives reportedly recommended Energy 11 and Energy Resources 12 to thousands of customers. The partnerships, structured to acquire and develop hydrocarbon-producing properties, promised 7% annual distributions with the potential for a liquidity event five to seven years after the close of the offering. David Lerner Associates reportedly sold approximately $374 million in Energy 11 and $219 million in Energy Resources 12, totaling about $593 million.

Although the funds have continued to make 7% distributions, neither has experienced a liquidity event. One fund paused distributions during the COVID-19 pandemic and resumed partial payments in late 2021.

According to FINRA:

• The offerings were speculative and illiquid, and therefore unsuitable for investors without a high tolerance for risk.
• DLA representatives sometimes updated investor profiles immediately before trades to reflect higher risk tolerance or greater net worth.
• Supervisors failed to investigate these red flags.

FINRA found DLA’s supervisory system inadequate and stated the firm failed to adequately address red flags, including last-minute profile updates and sales to elderly clients.

David Lerner Associates Sanctions

Without admitting or denying the findings, DLA agreed to:

• Pay restitution of $1,002,566.16.
• Accept a censure.
• Be barred from selling proprietary, illiquid products for two years.
• Retain an independent consultant to review supervisory systems and reconfirm client investment profiles.

Three former DLA representatives also settled related charges:

• Martin Lerner was reportedly fined $10,000 and suspended one month for failing to supervise, including approving trades with last-minute profile changes and to seniors.
• Daniel Todd Lerner was reportedly fined $5,000 and suspended two months for recommending a $60,000 investment to a 92-year-old retiree, representing 25% of her liquid net worth.
• Maxim Tulupnikoff was reportedly fined $5,000 and suspended two months for nine unsuitable recommendations totaling $148,000 to a married couple saving for retirement with a moderately conservative profile.

In 2017, David Lerner Associates was fined by the New Jersey Securities Bureau for similarly selling non-traded REITs to unsuitable investors.

David Lerner Investor Complaints and Ongoing Legal Claims

Numerous investors have filed complaints or initiated arbitration claims against David Lerner Associates, alleging:

• Unsuitable Investment Recommendations
• Overconcentration in Risky Products
• Failure to Disclose Investment Risks
• Misrepresentation of Income and Liquidity

Some investors have pursued FINRA arbitration claims to seek compensation for their losses. Many of these claims allege that DLA breached its duty to recommend investments aligned with the investor’s goals and financial situation.

Your Legal Options: FINRA Arbitration

If you invested in Energy 11 or Energy Resources 12 through David Lerner Associates, you may have grounds to file a FINRA arbitration claim to recover losses. FINRA arbitration is a private, streamlined legal process that can allow investors to seek recovery without going to court.

The White Law Group has represented dozens of investors with claims against David Lerner Associates. We can evaluate whether your investment losses may be recoverable through FINRA arbitration.

Frequently Asked Questions (FAQs)

Q1: Are Energy 11 and Energy Resources 12 still active?
Yes, but they remain illiquid, and resale opportunities are limited. Many investors are unable to recover their full investment.

Q2: Why were these products sold so aggressively?
David Lerner brokers received high commissions, and the firm had a history of promoting proprietary investment products.

Q3: What is FINRA arbitration?
It’s a legal process for resolving disputes between investors and brokers. Most brokerage account agreements require arbitration.

Q4: What is the current status of these investments?
Both Energy 11 and Energy Resources 12 have declined in value. Distributions may occur, but recovery of full principal is unlikely.

Q5: How can I find out if complaints were filed about my broker?
Use FINRA’s BrokerCheck tool to review your broker’s background and history of customer complaints.

Free Consultation with a Securities Fraud Attorney

If you or someone you know has suffered investment losses with David Lerner Associates, we may be able to help. Contact The White Law Group for a free consultation to discuss your situation.

Call us at 888-637-5510 or visit White Law Group.

The White Law Group, LLC – Nationwide FINRA Arbitration Attorneys

This information is intended for general educational purposes and is not legal advice.