An ex–David Lerner Associates broker has accepted a fine and suspension stemming from an allegation that he recommended unsuitable investments in an illiquid limited partnership to elderly clients.
During a period that spanned August 2015 and April 2018, Boca Raton, Florida–based broker Abbe Jan Wollins invested three David Lerner clients in an illiquid limited partnership formed for the purpose of acquiring and developing oil and gas properties, according to a letter of acceptance, waiver and consent published this week by the Financial Industry Regulatory Authority. The partnership’s objectives included making distributions to investors and, within a period of five to seven years after the termination of each offering, engaging in a liquidity event, though those objectives were substantially dependent on the performance of the properties in which the partnership invested, Finra said.
The product’s prospectus indicated that the investment involved a “high degree of risk” and was only appropriate for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment,” the industry’s self-regulator added.
The three clients at issue were all retirees, according to the consent document. One client, at the age of 93, invested $25,000 in the partnership, with the goal of supplementing his other income streams, which included Social Security benefits and required withdrawals from an individual retirement account, Finra said.
The other two clients were a married couple in their 80s, living off a pension, their savings and Social Security benefits, per the consent document. They invested a total of $128,907, Finra said.
Given the clients’ profiles, Finra concluded that the investments in the illiquid partnership violated Finra rule 2111(a), which addresses investment suitability, and Finra rule 2010, which imposes upon Finra-associated persons “high standards of commercial honor and just and equitable principles of trade.” Finra noted that Wollins received a total of $2,448.30 in commissions from the investments.
Wollins did not accept or deny Finra’s charges but agreed to a fine of $5,000, a three-month suspension and disgorgement of his commissions plus interest.
Wollins had been registered at David Lerner since 2007, according to his BrokerCheck record, and retired in 2021, according to a David Lerner spokesperson, who told FA-IQ that Wollins “acted professionally, ethically and responsibly and had never been accused of any regulatory misconduct, much less unsuitability.”
“Significantly, all Mr. Wollins’ customers who hold the investments at issue continue to receive attractive distributions and are all currently in net unrealized profit positions,” the spokesperson added.
The consent document does not indicate what triggered Finra’s investigation.
Wollins declined to provide a statement when contacted by FA-IQ and instead deferred to his attorney, New York–based Leonard Amoruso, who did not respond to a request for comment.
