FINRA fines David Lerner $15,000 for MSRB rule violations

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David Lerner Associates, Inc. agreed to pay a $15,000 fine to help settle allegations by the Financial Industry Regulatory Authority that the firm violated two municipal securities rules by allowing people lacking required registrations to supervise muni securities sales.

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FINRA found that DLA, which also consented to the imposition of a censure, violated Municipal Securities Rulemaking Board Rules G-2 and G-3 by allowing employees at two of the firm’s branch offices to supervise municipal securities sales despite those individuals’ lack of required registrations. 

DLA, which is headquartered in Syosset, N.Y., consented to FINRA’s findings without admitting or denying them, according to a settlement document accepted by FINRA on Oct. 5. 

“Between January 2022 and September 2024, and between January 2022 and April 2026, respectively, DLA permitted inadequately registered persons to supervise municipal securities sales at two of the firm’s branch offices,” FINRA said in its findings, which were contained in the settlement document.

Those individuals just held general securities principal registrations, “rather than qualified municipal securities principal or municipal securities sales principal registrations, as required by the MSRB rules,” FINRA said in its findings. 

During the time periods when the insufficiently registered individuals were supervising municipal securities sales, the combined number of muni securities transactions engaged in by the two branches totaled approximately 4,000, according to the document. 

“DLA now has municipal securities principals supervising sales of municipal securities at both branches,” FINRA said in the document, adding that the firm “also conducted a retroactive review of all municipal securities trades from January 2022 to April 2026 that occurred before municipal securities principals were in place in the two relevant branches.” 

MSRB Rule G-2 bans dealers from effecting transactions in muni securities and municipal advisors from engaging in municipal advisory activity unless they and their associated personnel are qualified in accordance with MSRB rules. MSRB Rule G-3 sets forth professional qualification and continuing education requirements for, and specifies the number of supervisory personnel who must be associated with, dealers and MAs. 

DLA did not immediately respond to requests for comment from The Bond Buyer on Tuesday.