News: David Lerner Associates to Face FINRA Panel in September

by InvestorLawyers on July 23, 2012

in Arbitration,FINRA,Florida,New York,Retirement,SEC,Securities Fraud,Suitability

David Lerner Associates is in the spotlight once again as it is threatened by charges alleging that the company and its principle, David Lerner, deceived customers — many of whom were elderly, unsophisticated investors. David Lerner, 75, is surrounded by controversy regarding 20 years of real estate investment sales. As a result of his alleged misdeeds, an abundance of complaints, regulatory sanctions and litigation have been left in his wake. Lerner has used seminars and radio to sell shares of a Virginia-based Real Estate Investment Trust (REIT) that, in turn, invests in extended-stay hotels. Stock fraud lawyers and industry regulators say that David Lerner Associates has sold shares of Apple REIT amounting to almost $7 billion, in 120,000 customer accounts, since 1992. Those sales have generated a staggering $600 million in fees.

News: David Lerner Associates to Face FINRA Panel in September

Furthermore, according to FINRA’s complaint, David Lerner Associates allegedly earns 10 percent from the Apple REIT offerings, and that these fees account for 60-70 percent of the firm’s business since 1996. The complaint also alleges that the firm is “targeting unsophisticated and elderly customers” while making false claims and omissions about market values, investment returns, prospects and performance of the REIT.

Investment fraud lawyers say that sales strategies employed by the 350 or more brokers employed by Lerner include mailings, cold calls and seminars at hotels, restaurants, country clubs and senior centers. Lerner is also known in New York and Florida for his spots on an AM radio station.

Non-traded REITs have been increasingly scrutinized by the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA). Stock fraud lawyers are regularly filing and winning cases involving the unsuitable recommendation of non-traded REITs.

FINRA filed a 58-page enforcement action against David Lerner Associates in December of 2011 which included charges of failing to properly investigate the suitability of the Apple REIT investment for each client, artificially valuing shares and making negligent omissions or misrepresentations of material fact. According to investment fraud lawyers, FINRA rules have established that brokers and firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Depending on the outcome of the enforcement action, Lerner may be ordered to pay fines and disgorgement, and could be barred from the securities industry. The FINRA disciplinary panel hearing is scheduled for September.

If you believe you have been the victim of fraud at the hands of David Lerner Associates, contact an investment fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

Previous post:

Next post: