Last Updated: March 9, 2025
If you’ve suffered investment losses while working with Nicholas T. Jembelis, call 800-950-6553 or complete our online form to schedule your no-obligation case evaluation.
Investors who worked with Nicholas T. Jembelis (CRD# 4028696) and experienced losses in Energy 11 and Energy 12 investments may have recovery options through FINRA arbitration. Currently registered with David Lerner Associates in White Plains, New York, Jembelis’s FINRA BrokerCheck report reveals a pending customer dispute that investors should be aware of.
Key Details About Nicholas Jembelis and the Pending Customer Dispute
Nicholas Jembelis has been registered with David Lerner Associates, Inc. (CRD# 5397) since October 21, 1999, working out of their White Plains branch office. His unusually long tenure at a single firm—over 25 years—stands in contrast to the industry norm of broker movement between firms.
Of significant concern is a pending FINRA arbitration case (Case #25-00151) filed on January 22, 2025, alleging:
- Unsuitability
- Misrepresentation and omission of material facts
- Breach of fiduciary duty
The customer dispute involves investments in Energy 11 and Energy 12 products, with alleged damages of $150,000. The complaint covers activity from August 4, 2014 (the date of the first purchase) through January 29, 2025 (when the Statement of Claim was received).
Understanding Energy 11 and Energy 12 Investments
Energy 11 and Energy 12 are limited partnerships focused on the oil and gas sector. These types of alternative investments typically present higher risks than traditional securities and may be unsuitable for many retail investors, particularly those with conservative investment objectives or liquidity needs.
Key Risks of Energy Limited Partnerships
- Liquidity Constraints: These investments are often illiquid with no established secondary market, making them difficult or impossible to sell if investors need access to their capital.
- Dependence on Commodity Prices: Performance is heavily dependent on volatile oil and gas prices, which can fluctuate dramatically based on global market conditions.
- Complex Tax Implications: These partnerships often generate complex tax reporting requirements through K-1 forms that may increase investors’ accounting costs.
- High Fees and Expenses: Many energy partnerships carry substantial upfront sales charges, ongoing management fees, and operational expenses that can significantly erode returns.
- Concentration Risk: Investing heavily in a single sector like energy exposes investors to sector-specific downturns without the benefits of diversification.
The Nature of the Allegations Against Jembelis
1. Unsuitability Claims
FINRA Rule 2111 requires that brokers have a reasonable basis for believing their recommendations are suitable for their clients based on factors including:
- Investment objectives and time horizon
- Risk tolerance
- Financial situation and needs
- Investment experience
- Tax status and needs
When brokers recommend complex energy partnerships to retirees, conservative investors, or those with liquidity needs, they may be violating this core obligation. The pending claim against Jembelis suggests that Energy 11 and Energy 12 investments may not have been appropriate for the investor’s specific situation.
2. Misrepresentation and Omission
Securities laws and FINRA rules prohibit material misrepresentations and omissions when recommending investments. Brokers must fully and accurately disclose all material facts about recommended investments, including:
- The speculative nature of energy partnerships
- Illiquidity and lock-up periods
- All fees, commissions, and expenses
- Specific risks related to energy sector investments
- Historical performance of similar offerings
- Conflicts of interest, including enhanced compensation for selling these products
Failure to adequately disclose these factors can constitute securities fraud and provide grounds for recovery through FINRA arbitration.
3. Breach of Fiduciary Duty
Investment advisors owe fiduciary duties to their clients, requiring them to act in the client’s best interest at all times. This includes:
- Putting client interests ahead of their own
- Providing full and fair disclosure of all material facts
- Avoiding conflicts of interest or fully disclosing them
- Ensuring recommendations are suitable and appropriate
The allegation that Jembelis breached his fiduciary duty suggests that he may have prioritized his own interests (including potentially higher commissions from selling these products) over the investor’s financial wellbeing.
Professional Background and Registration History
Nicholas Jembelis has spent his entire securities career at David Lerner Associates, beginning in September 1999. This unusually long tenure at a single firm raises questions about his exposure to diverse investment practices and products.
His current registrations include:
- FINRA (since October 21, 1999)
- Registered in 22 U.S. states and territories, including Arkansas, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, South Carolina, Texas, Vermont, Virginia, Washington, and Wisconsin
His examination history shows:
- Securities Industry Essentials Examination (SIE) – October 1, 2018
- General Securities Representative Examination (Series 7) – October 20, 1999
- Uniform Securities Agent State Law Examination (Series 63) – November 9, 1999
Notably, Jembelis has not passed any principal/supervisory exams, which would be required for supervising other financial advisors or managing a branch office.
Other Business Activities
Jembelis discloses that he also serves as an Investment Advisory Representative and Agent at Spirit of America Management Corporation, an affiliated company of David Lerner Associates. This connection raises potential concerns about conflicts of interest and whether investors were properly informed about these relationships when receiving investment recommendations.
David Lerner Associates: Regulatory History and Concerns
David Lerner Associates, Inc. has faced regulatory scrutiny in the past related to the sale of alternative investments. In 2012, the firm was ordered to pay over $14 million in restitution to customers who purchased shares of Apple REITs, a series of non-traded real estate investment trusts, after FINRA found the firm did not perform adequate due diligence and used misleading marketing materials.
This history of regulatory issues surrounding alternative investment products makes the current allegations against Jembelis particularly concerning, as they involve similar alternative investment products—Energy 11 and Energy 12 limited partnerships.
Warning Signs for Investors
If you invested with Nicholas Jembelis in Energy 11, Energy 12, or other alternative investments, watch for these potential red flags:
- Initial presentations that emphasized high yields or returns while minimizing discussions of risk
- Lack of documentation about the specific risks of energy sector investments
- Recommendations that seemed inconsistent with your stated investment objectives or risk tolerance
- Difficulty accessing your investment or receiving complete information about performance
- Account statements that showed declining values but were explained away as temporary
- Pressure to invest quickly without adequate time for due diligence
- Minimal discussion of fees, expenses, and commissions
Recovery Options for Investors
If you believe you were misled about Energy 11 or Energy 12 investments or that Nicholas Jembelis recommended unsuitable investments, several potential recovery paths exist:
1. FINRA Arbitration
The most common method for recovering investment losses is through FINRA arbitration. This process offers several advantages:
- Typically faster than court litigation, often concluding within 12-18 months
- Lower costs than traditional litigation
- Industry expertise among arbitrators
- Binding decisions that are difficult to appeal
FINRA arbitration is particularly appropriate for claims involving:
- Unsuitable investment recommendations
- Misrepresentation or omission of material facts
- Breach of fiduciary duty
- Failure to supervise (claims against the brokerage firm)
2. Securities Class Actions
When many investors have suffered similar losses from the same misconduct, a securities class action may be appropriate. These cases allow investors to pool resources and collectively seek recovery.
3. Regulatory Complaints
Filing complaints with regulatory authorities can support your arbitration case and help protect other investors:
- FINRA – The Financial Industry Regulatory Authority oversees brokers and brokerage firms
- SEC – The Securities and Exchange Commission regulates securities markets
- State Regulators – State securities divisions where Jembelis is registered
While regulatory complaints typically don’t result in direct monetary recovery, they create an official record of your allegations and may lead to investigations that support your arbitration claim.
Time Limitations for Filing Claims
Investors should be aware of important time limitations for investment fraud claims:
- FINRA arbitration claims typically must be filed within six years of the events giving rise to the dispute
- State securities law claims often have shorter statutes of limitations, typically 2-3 years
- The discovery of the fraud or misconduct may extend some deadlines under certain circumstances
Given that the allegations against Jembelis date back to August 2014, the window for filing claims based on the earliest investments may be closing soon. Affected investors should consult with a securities attorney promptly to determine if their claims remain viable.
Steps to Take If You Invested with Nicholas Jembelis
If you invested with Nicholas Jembelis in Energy 11, Energy 12, or other alternative investments and experienced losses, consider these important steps:
- Gather Documentation – Collect all account statements, prospectuses, marketing materials, emails, and notes from meetings
- Review Investment Performance – Compare actual returns against what was promised or projected
- Request Your Complete Client File from David Lerner Associates
- Consult a Securities Attorney experienced in FINRA arbitration and energy sector investments
- Act Promptly before applicable statutes of limitations expire
The Importance of Specialized Legal Representation
Recovering losses from energy-sector limited partnerships requires specialized experience. These cases involve:
- Complex analysis of energy market conditions during relevant periods
- Understanding of disclosure obligations specific to limited partnerships
- Knowledge of how arbitration panels have historically viewed these investments
- Expertise in calculating appropriate damages
Our attorneys have successfully represented numerous investors in cases involving energy sector investments and have specific experience with limited partnerships similar to Energy 11 and Energy 12.
Free Consultation with an Investment Fraud Attorney
Our firm specializes in representing investors who have suffered losses due to broker misconduct and unsuitable investment recommendations. We understand the complex nature of energy sector investment fraud and have successfully represented clients in FINRA arbitration proceedings against major financial institutions, including David Lerner Associates.
If you invested with Nicholas T. Jembelis and experienced losses in Energy 11, Energy 12, or other alternative investments, contact us today for a free, confidential consultation. Our securities attorneys work on a contingency fee basis, meaning you pay nothing unless we recover money for you.
Don’t let the statute of limitations expire on your potential claims. Call 800-950-6553 or complete our online form to schedule your no-obligation case evaluation.
Disclaimer: The allegations referenced in this article are taken from FINRA BrokerCheck records and have not been proven in arbitration or litigation. All individuals are presumed innocent until proven otherwise. This article is for informational purposes only and does not constitute legal advice.
