Levin Papantonio Law Firm Investigates New York Brokerage Firm David Lerner & Associates for Sales of APPLE REITs and CMOs

On Tuesday, May 31, 2011, FINRA sued Lerner’s firm, David Lerner Associates Inc. (DLA), and charged the broker-dealer with multiple counts of securities fraud. The investment products promoted by Lerner include real estate investment trusts (REITs), Real Estate Mortgage Investment Conduits (REMICs), and collateralized mortgage obligations (CMOs). FINRA’s Deptarment of Enforcement alleges several violations committed by DLA, including:

•  Selling investors unsuitable securities products that carried high commissions;

•  Targeting elderly and inexperienced investors in misleading them about a $2 billion real estate fund;

•  Failure to disclose associated risks with the investment;

•  Distorting the value of Apple REIT shares and potential profit;

•  Failure to conduct due diligence;

•  Misrepresentation of market information;

•  Failure to revisit and adjust the valuation of Apple REITs according to actual market data;

•  Violating the duty to observe high standards of commercial honor and just and equitable principles of trade;

•  Failure to fulfill the reasonable-basis suitability obligation.

Ronald A Rosenfeld, an Apple REIT ten director, resigned from his position on the REIT ten board on June 9, 2011. Such was the aftermath of an ill-advised comment to the New York Times on June 3 rd – when Apple REIT promoter Glade Knight admitted that he didn’t know the value of Apple REITs, saying, “who knows what the value is?” (http://www.nytimes.com/2011/06/03/business/03norris.html )

For more information regarding FINRA’s suit against David Lerner, see the official complaint at: http://www.finra.org/Newsroom/NewsReleases/2011/P123738 .

If you have invested in Apple REITs through David Lerner Associates and have questions, please give us a call at 1-888-435-7001 .

---

Related News

 

FINRA sues David Lerner founder for misleading investors

January 30, 2012

(Reuters) - David Lerner, who owns a brokerage that regulators say misled investors in its marketing of real estate securities, is now charged with similar misdeeds for statements he made to quell anxious customers, according to a complaint.

---

Non-traded REITs face tough scrutiny

January 15, 2012

After a year in which securities regulators cracked down on nontraded real estate investment trusts, REIT sponsors and the broker-dealers who sell them are focusing on compliance and whether sales of the products to investors are suitable.

---

Lerner resorted to tricks to plump up Apple distributions: Suit

October 14, 2011

Plaintiffs claims B-D used a line of credit and returning capital to hike dividends; 'stark and startling'

---

Finra wants faster valuations of nontraded REITs

September 20, 2011

Finra is putting the finishing touches on a rule proposal that would shorten the amount of time that broker-dealers have to come up with estimated valuation of a nontraded REIT.

---

Apple REIT Cos. Considering Merger of its Non-Listed Hotel REITs

August 24, 2011

Apple Real Estate Investment Trust Cos. in Richmond, VA, is evaluating a potential consolidation of four of its five non-listed hotel REITs: Apple REIT Six, Seven, Eight and Nine. A potential consolidation could also include a listing of the stock of the combined enterprise for trading on a national exchange.

---

Regulator wants to firm up pricing of illiquid securities

July 19, 2011 - Investment News

Finra is continuing to shake up the way broker-dealers show the value of illiquid investments such as non-traded real estate investment trusts and private placements on clients' account statements.

---

Statements Skip Over REIT’s Woes

New York Times

Late 2007 was among the worst times ever to invest in real estate, and those who did so have losses to show for it.

---

Nontraded REITs Are Put on Notice by SEC

June 29, 2011

The Securities and Exchange Commission is intensifying its scrutiny of the booming business of real-estate investment trusts that aren't traded on a stock exchange, SEC officials say.

---

David Lerner Associates’ fiduciary compliance on Apple REITs under investigation

June 18, 2011

I don’t know about you, but I’ve run into reps of David Lerner Associates Inc., Syosset, N.Y., soliciting over the last few years at West Palm Beach convention center events.

---

Finra files a complaint against David Lerner Associates Inc.

June 5, 2011

David Lerner Associates Inc. has been accused of targeting unsophisticated seniors while selling real estate investment trust shares without considering whether the illiquid securities were suitable for its clients.

---

Finra Sues David Lerner Firm

June 1, 2011

Investment broker David Lerner emerged in recent years as one of the most successful money-raisers in the real-estate business by touting his ability to produce consistent and steady returns in the 7%-to-8% range for mom-and-pop investors.