Robert W Pearce's  Instablog

Robert W Pearce
Send Message
Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 35 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
    Nov 28, 2012 12:23 PM

    David Lerner Associates (NYSEMKT:DLA) is not quite out of its legal predicament even though it was recently hit with serious sanctions from securities regulators due to the firm's sale of non-traded real estate investment trusts (REIT) and municipal bonds. This time, the Financial Industry Regulatory Authority (FINRA) has smacked DLA for allegedly conducting unfair sales practices and excessive markups. DLA is currently facing an indefinite amount of arbitration complaints from clients who purchased certain REITS such as Apple REITs 6, 7, 8, and 9 and municipal securities. FINRA's sanctions order, which includes David "Poppy" Lerner in it, will most likely strengthen those claims.

    "David Lerner and his firm targeted unsophisticated and elderly customers, grossly failing to comply with basic standards of suitability in selling Apple REIT 10 to thousands of customers," said Brad Bennett, FINRA's chief of enforcement. According to Robert Pearce, a Florida based securities attorney, "FINRA only picked the low-hanging fruit." Investors in Apple REITs 6, 7, 8, and 9 were also sold misrepresented and unsuitable investments. DLA has sold non-traded REITs, which do not trade on exchanges but are held by investors for a number of years and collect dividends over the life of the investment. DLA has sold over $7 billion worth of Apple REITs over the past 20 years.

    When FINRA brings a regulatory action that is settled by a broker-dealer that sold a particular REIT, it supports the fact that the REIT was sold to customers who were not suitable investors. FINRA ordered the DLA to pay $12 million in restitution to clients who bought shares of non-trade REIT known as Apple REIT 10. FINRA also fined DLA more than $2.3 million for charging unfair prices on municipal bonds and collateralized mortgage obligations. This particular action is the largest single restitution payment for REIT investors. In addition, investors have filed arbitration claims against DLA for their losses. David "Poppy" Lerner, DLA's CEO, was fined $250,000.00 and suspended from the securities industry for one year. After his suspension is complete, Mr. Lerner will face a two-year suspension from acting as a firm's principal. FINRA also fined DLA's head trader, William Mason, $200,000.00 and suspended him from the securities industry for six months. The restitution and fines has put to rest two long investigations into the firm, which has 190 registered representatives and six branches in New York and Florida.

    Mr. Lerner and his management team concluded that it was best to settle with the regulators. The first action against DLA stemmed from a complaint filed in 2011 alleging that it conducted improper sales practices in connection with the $2 billion Apple REIT 10. DLA recommended and sold more than $442 million of Apple REIT 10 between January and December 2011 without performing adequate due diligence in violation of its suitability obligations. DLA has been the exclusive seller of Apple REITs, which invests primarily in two national chains of extended-stay hotels. Earlier Apple REITs such as 6, 7, 8, and 9 were inappropriately valued at an artificial price of $11 a share, notwithstanding years of market fluctuations, performance declines, increased leverage, and excessive return of capital to investors.

    Have you suffered losses in Apple REITs 6, 7, 8, and/or 9 sold by David Lerner Associates? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website,, post a comment, call (800) 732-2889, or email Mr. Pearce at for answers to any of your questions about this blog post and/or any related matter.

Back To Robert W Pearce's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (4)
Track new comments
  • joejoe2020
    , contributor
    Comment (1) | Send Message
    Does anyone know what is happening with Apple REIT 6?. All this talk of a sale and the shareholders are still waiting.
    25 Feb 2013, 06:25 AM Reply Like
  • dannyiselin
    , contributor
    Comment (1) | Send Message
    all I know is that my stash in it has not been earning dividends for the past 2 months. My advisor says to wait and then I should roll it ove into Apple 10. I may just roll it over to my Vanguard accounts.
    6 Mar 2013, 04:11 AM Reply Like
  • SKEP21
    , contributor
    Comments (2) | Send Message
    I think your "advisor" has a lot of nerve suggesting Apple 10! Who's he looking out for, your interests and goals or his commission? Take your money and RUN!
    19 Mar 2013, 11:03 PM Reply Like
  • SKEP21
    , contributor
    Comments (2) | Send Message
    Your "advisor" has a lot of nerve suggesting a roll into Apple 10! After tying up your money for 8 years in 6 and receiving NO dividends for the past 5 months I wonder whose interests he is serving, yours or his? Take your money and RUN from DLA!
    19 Mar 2013, 11:02 PM Reply Like
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.