Investor Lawyers Blog
News commentators and regulators alike have called into question the sales practices of David Lerner Associates, which solicited many of its customers to invest in illiquid real estate investment trusts (“REITs”) called Apple REITs.
The Financial Industry Regulatory Authority (“FINRA”) announced in March 2011 that it filed a complaint against David Lerner Associates, charging the firm with soliciting investors to purchase shares in Apple REIT Ten without conducting a reasonable investigation to determine whether it was suitable for investors, and with providing misleading information on its website regarding Apple REIT Ten. According to FINRA’s allegations, David Lerner Associates has sold and continues to sell Apple REIT Ten targeting unsophisticated and elderly customers with unsuitable sales of the illiquid security.
Since January 2011, as sole underwriter for Apple REIT Ten, David Lerner Associates has allegedly sold over $300 million of an open $2 billion offering of the REIT’s shares. Therefore, there may be hundreds of David Lerner Associates customers affected by these alledgely unlawful sales practices.
FINRA’s complaint alleges that since at least 2004, the closed Apple REITs have unreasonably valued their shares at a constant price of $11 notwithstanding market fluctuations. It is likely that in truth and fact, these valuations do not affect the true value of the REIT’s shares in light of the turmoil in the real estate markets in recent years and drops in nationwide real estate prices.
FINRA alleges that David Lerner Associates knowingly failed to sufficiently investigate the valuation and distribution irregularities of the closed Apple REITs prior to selling Apple REIT Ten to its customers and failed to ensure that statements sent to customers reflected true and accurate values for the shars.
Some investors want to request a full redemption of their principal invested in Apple REITs. However, they have reportedly been asked to sign Redemption Acknowledgement Forms which contain language and acknowledgements which may affect their legal rights.
Investors who believe that may have been the victim of a sales practice violation by David Lerner Associates may contact InvestorLawyers.net attorneys by filling out the form below or e-mailing newcases@investorlawyers.net.