Close Menu

FINRA Adds Allegations to Pending Complaint Against David Lerner & Associates

The Financial Industry Regulatory Authority (“FINRA”) has amended its pending complaint against David Lerner & Associates (“DLA”) to add claims against David Lerner (“Lerner”), personally, and to add allegations that DLA continues to make false and misleading claims to potential investors with regard to Apple REITs, non-traded real estate investment trusts.

FINRA’s initial complaint against DLA, filed in May 2011, asserted that DLA made material misrepresentations and omissions in the marketing of Apple REITs. The complaint alleged that DLA marketed the Apple REITs to elderly and unsophisticated investors without determining whether the investments were suitable for the investors.

FINRA’s initial complaint further asserted that since at least 2004, shares of the Apple REITS have been unreasonably valued at $11 notwithstanding market fluctuations, declines in performance and leverage increases. FINRA claims that, despite the obvious irregularities in valuation, DLA did not sufficiently investigate the valuation of the REITs prior to marketing them to investors and provided misleading information on DLA’s website regarding distributions. In addition, it is believed that DLA represented Apple REITs as safe and liquid, when in fact, they are illiquid and inappropriate for investors looking to access their money. FINRA recently issued an investor alert bulletin about the dangers of non-traded REITs such as the Apple REITs.

According to FINRA’s amended complaint filed in December, between April and November 2011, DLA and Lerner made false and exaggerated claims regarding the investment returns, market values and performance of Apple REITs to over 1,000 potential investors during at least four investment seminars. According to FINRA, DLA and Lerner made misrepresentations that a past series of Apple REITs would merge and go public at a price of up to $20, well above the initial $11 offering price, and omitted to disclose that the income from the REITs was insufficient to support the promised 7%-8% returns.

According to FINRA, since January 2011, DLA has recommended and sold more than $442 million of Apple REIT Ten, resulting in sales commissions to the firm of $42 million. FINRA also claims that since 1992, DLA has sold almost $7 billion of Apple REITS which generated approximately $600 million in sales commissions to the firm.

Investors nationwide who have suffered a loss as a result of an investment in Apple REITs, and who may have a FINRA arbitration claim, may contact the Florida securities attorneys at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to kelly@mccaberabin.com.

Facebook Twitter LinkedIn Google Plus