The Bond Broker Wall of ShameApril 5th, 2012 by David Waring
(April 4th, 2012) Buying a bond is not like buying a stock so who you deal with when buying bonds can have a large influence on the price you receive on your trades, and therefore your costs. As a recent report on municipal bond execution shows, investors buying municipal bonds should be especially careful.
Which bond brokers should you avoid?
Which bond brokers have been embroiled in scams, fined by regulators (SEC/FINRA) or received lots of complaints? The Bond Broker Wall of Shame is designed to answer those questions.
At this point, we are adding brokers on a first come, first serve basis so the order is based on that, and not the severity of their immoral or illegal actions. If you have a complaint and believe you’ve been scammed, you can certainly send it to us and we will consider posting it. We are not regulator or lawyer and are therefore not in a position to rectify the situation through legal or administrative means. That said, you will be serving the greater good and potentially protecting other investors from being ripped off.
The Bond Broker Wall of Shame
David Lerner Associates
David Lerner Associates was fined by a FINRA panel $2.3 Million for selling municipal bonds and collateralized mortgage obligations at “unfairly high prices.” Unfortunately, many brokers charge retail investors on average 2% more than institutional clients. However, it appears that the mark-up on bonds charged by David Lerner associates were even higher than industry standards. This is not the first time that David Lerner Associates have ended up in the limelight. The sales and marketing practices of David Lerner Associates with regards to selling REITS have received regulatory scrutiny.