David Lerner Associates (DLA) has been slapped with a Financial Industry Regulatory Authority (FINRA) arbitration claim of $100K by a New York widow. Her claim stems from the losses incurred as a result of investments made at the behest of DLA broker Michael Joseph Norton, which included, but were not limited to, the firm’s proprietary Energy 11 LP private placement.
She entrusted to Norton a large part of her investible wealth, more than half of which ended up in Energy 11, highly speculative investment and, for a retired, unsophisticated investor, utterly unsuitable. And this was done after his assurance of not exposing her to investments that carried inherent undue risk.
Her allegations include unsuitable recommendation of Energy 11, unsuitability, inadequate supervision, misrepresentations and omissions, several breaches of duty, and intentional, negligent, or grossly negligent misconduct. Unfortunately, there are several other claims against DLA for Energy 11 sales.
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What is Energy 11 LP?
Energy 11 is a non-public limited partnership, investments in which are made through private placements, Energy 11 invests in 221 producing wells as non-operated working interest and 247 future development locations in the Spanish Field in Mountrail County, North Dakota.
Although private placements can be the right choice for high net worth investors, they have recently been sold to many regular investors that do not fully understand the risk and lack of liquidity. It is the responsibility of both the financial advisor and his broker-dealer that the investments sold be both understandable and suitable to their clients.
Who is Michael Joseph Norton | David Lerner Associates (DLA)
Joseph Norton, a Syosset, NY stockbroker, and a DLA registered representative since 1998, has been named in several customer disputes earlier. An industry veteran of 24 years, before joining DLA, Norton worked with Meyers Pollock Robbins, Inc. and Marlowe & Co., both firms suffering the same fate of being expelled by FINRA in 2001.
Nine other disclosures are visible on Norton’s BrokerCheck record, all customer disputes. They are listed below (except the ones denied and withdrawn) in reverse chronological order:
- 11/2020: Another Energy 11 fraud claim against DLA seeking $50K in damages; remains pending.
- 7/2019: A Puerto Rico municipal bond fraud case, settled for $2,750.
- 4/2018: Case of unsuitable recommendation, as well as alleged misrepresentations and omissions, settled for $10K.
- 1/2018: A case of unsuitability, settled for $4,750.
- 5/2016: Alleging unsuitability, the claimant received a $6K settlement.
- 10/2013: Claim for $50K in damages for unsuitability; closed due to no action.
The broker has added comments on his BrokerCheck record to the effect that he was not named as a respondent by FINRA in these cases. There are several pending cases against him and his firm.
Energy 11 Lawsuit: Investor Recovery Options
If it is any consolation for this New York retiree, it is that she is not the only one who has been unsuitably sold Energy 11. Many others are in the same situation and exploring options to recoup their losses. Incidentally, Energy 11 suspended distribution last year on account of volatility in the oil and gas market, presumably as a fallout of the pandemic.
If you have Energy 11 in your portfolio and would like to understand your options, we suggest you speak to an experienced broker fraud attorney today. One of the top national investor law firms, Haselkorn & Thibaut, has set up a toll-free line for investors to get a free consultation by calling 1 888-628-5590.