David Lerner Associates: A Critical Overview

David Lerner Associates (DLA) is a financial services firm headquartered in Syosset, New York, known for its focus on municipal bonds, real estate investment trusts (REITs), and other alternative investments. Founded in 1976 by David Lerner, the firm has a long history of serving individual investors, particularly retirees and those seeking income-generating investments.

DLA differentiates itself through a strong emphasis on personalized financial advice, delivered by a network of financial advisors operating primarily in the New York metropolitan area. They often host seminars and workshops to educate potential clients about investment opportunities, particularly those offered by the firm.

Focus on Non-Traded REITs

A significant portion of DLA’s business has historically involved the promotion and sale of non-traded REITs, particularly those sponsored by Apple REIT Companies (now Apple Hospitality REIT). Non-traded REITs, unlike publicly traded REITs, are not listed on major stock exchanges. This characteristic means they are less liquid, making it difficult for investors to quickly sell their shares should they need access to their capital. While offering potentially higher yields than traditional investments, non-traded REITs carry a higher degree of risk and complexity.

Regulatory Scrutiny and Controversies

Over the years, David Lerner Associates has faced regulatory scrutiny from various authorities, including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These investigations have often centered on allegations of unsuitable sales practices, inadequate disclosure of risks associated with non-traded REITs, and conflicts of interest. For example, DLA faced charges related to its marketing and sale of Apple REIT Ten, Inc., with regulators alleging the firm failed to adequately disclose risks and misled investors about the REIT’s performance.

These regulatory actions have resulted in significant fines and penalties for DLA, as well as requirements to provide restitution to affected investors. While the firm has addressed these issues and implemented compliance measures, the historical record underscores the importance of conducting thorough due diligence before investing in any product recommended by DLA, especially non-traded REITs.

Investor Considerations

Potential investors considering working with David Lerner Associates should be aware of the following:

• Understand the risks: Non-traded REITs are illiquid and can be difficult to value. Ensure you understand the specific risks associated with any investment recommended by DLA.
• Independent Research: Don’t rely solely on the information provided by DLA. Conduct your own independent research and consult with an independent financial advisor.
• Fee Structure: Understand the fees and commissions associated with any investment product. Non-traded REITs often have higher fees than traditional investments.
• Investment Objectives: Ensure the investment aligns with your overall financial goals and risk tolerance.
• Alternatives: Explore alternative investment options and compare their potential risks and rewards.

In conclusion, David Lerner Associates is a financial services firm with a long history and a particular focus on non-traded REITs. While the firm offers personalized financial advice, potential investors should be aware of the firm’s regulatory history and conduct thorough due diligence before investing in any product recommended by DLA. Understanding the risks, fees, and alternatives is crucial for making informed investment decisions.