David Lerner Associates

David Lerner Associates, Inc.
Corporation
Industry Financial Services
Founded 1976
Founder David Lerner
Headquarters Syosset, NY
United States
Products Investments
Owner David Lerner
Number of employees
 350+
Website www.davidlerner.com

David Lerner Associates is a privately held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. Their product offerings include Apple Real Estate Investment Trusts (REITs), bonds, collateralized mortgage obligations, retirement funds, mutual funds, life insurance, and other services.[1]

They have become well known in the New York metropolitan area for their "Take A Tip From Poppy" radio segments[2] and hold investment seminars for potential investors in the tri-state New York area and Florida.[1] The firm had success in generating income through real estate investments and promoted a steady 7-8% return for investors of modest means.[3] As of June 2011 the Company had sold approximately $6.8 billion in Apple REIT securities to 122,000 customers starting in 1992. In 2010 alone they raised $1 billion for one fund.[2]

History

According to the Company website, David Lerner was previously a History and Economics high school teacher in Bayside, New York. To make ends meet, he began to sell mutual funds and life insurance for First Investors in 1961.[1] In 1976, he founded David Lerner Associates, Inc. with their first office located in Jericho, New York.

In the late 1970s, market conditions changed causing the firm to re-assess the value of mutual funds. Lerner began offering tax-free municipal bonds.[1]

By 1980, to cope with rapid expansion, the firm began outsourcing regulatory duties to a third-party firm, Security Pacific, a bond clearinghouse. After finding that Security Pacific "did not follow the rules," Lerner reported the issues to the National Association of Securities Dealers (NASD) and after "months of intense activity and investigation all issues were resolved."[1]

Today, David Lerner Associates employs approximately 400 people, with its headquarters in Syosset, New York and satellite offices in Princeton and Teaneck, New Jersey; White Plains, New York; Westport, Connecticut; and Boca Raton, Florida.[1]

Lerner has been a notable donor to causes in his community, including the Trey Whitfield School in Brooklyn, which he has supported with $300,000 in donations while helping to raise another $1 million, earning him mention in the Wall Street Journal.[4] He has for twenty years been the "prime donor" in the Greater Long Island Running Club, which sponsors the annual Police Appreciation Run.[5] In January 2012 Lerner presented a check, with the club, to cover school expenses for the children of a slain local ATF agent.[6]

Awards

According to a survey conducted by the Best Companies Group in 2011, David Lerner Associates was awarded 6th place in the large employer category as one of the Best Companies to work for in New York State.[7]

Merger of Apple REIT Six

In May 2013 Apple REIT Six Inc. completed a merger with an affiliate of the Blackstone Group LP. The Apple REIT Six was sold exclusively by the Lerner firm to investors from 2004 to 2006, with most shares at $11. This added slightly to the principal of the investors: Each holder of an Apple REIT Six unit received $11.10 in value, consisting of $9.20 in cash and $1.90 per share in preferred stock of the Blackstone affiliate, BRE Select Hotels Corp. Investors could redeem the new shares after seven and a half years; the shares have a dividend rate of 7%. The total transaction value of the deal was $1.2 billion.[8] The portfolio of Apple REIT Six consists of 66 hotels in 18 states and cashed out successfully for its investors.[9][10]

FINRA complaint and class action dismissal

In May 2011, the Financial Industry Regulatory Authority (FINRA) filed a class action lawsuit against David Lerner Associates, charging the firm with misleading investors by marketing unsuitable products to them and conducting insufficient due diligence on the company that managed its real estate funds.[3]

In October 2012, David Lerner Associates agreed to settle with FINRA for $14 million without admitting or denying the charges.[11] Lerner was fined $250,000 and suspended from the securities industry for one year and head trader William Mason fined $200,000 and suspended for six months.[12]

In April 2013, U.S. District Judge Kiyo Matsumoto dismissed the class action lawsuit, ruling that investors had received sufficient disclosure to understand the risks of investing in its trusts.[13] In her opinion, Judge Matsumoto wrote, “Plaintiffs’ belabored Complaint appears only to confirm that the Apple REITs are currently functioning in exactly the manner that was anticipated and disclosed in the REITs’ prospectuses and other offering documents.”[14]

References

  1. 1 2 3 4 5 6 "About David Lerner and Associates". David Lerner and Associates. David Lerner Associates Inc. Retrieved 23 September 2016.
  2. 1 2 Voreacos, David (June 20, 2011). "David Lerner Associates Sued Over $6.8 Billion in REITs". Bloomberg, LP. Retrieved 23 September 2016.
  3. 1 2 Troianovski, Anton (June 1, 2011). "Finra Sues David Lerner Firm". The Wall Street Journal. Retrieved 23 September 2016.
  4. ↑ Bango, Shelly (September 24, 2010). "Brooklyn School Gets Financial Aid". The Wall Street Journal. Retrieved 23 September 2016.
  5. ↑ Bernstein, James (April 5, 2011). "Runners get donor's 20th check to aid cops". Newsday. Retrieved 23 September 2016.
  6. ↑ Doyle, Heather (January 12, 2012). "Fallen ATF Agent's Family Receives Donation in Syosset". Patch Media. Retrieved 23 September 2016.
  7. ↑ Zelman, Lorri (May 2011). "50 Employers in the Empire State Named "Best Companies to Work For in New York" 2011" (PDF) (Press release). New York, NY: New York State Society for Human Resource Management. Retrieved 2016-09-23.
  8. ↑ Schwarz, Michael (May 13, 2013). "Local REIT fund sold in billion-dollar deal". Richmond BizSense. Retrieved 25 September 2016.
  9. ↑ Peter, Bacque (November 30, 2012). "Apple REIT Six to be sold in proposed $1.2 billion deal". Richmond Times-Dispatch. Retrieved 23 September 2016.
  10. ↑ Kelly, Bruce (November 3, 2012). "Nontraded REIT deal good news for shareholders". Investment News. Retrieved 23 September 2016.
  11. ↑ "Order Accepting Offer Of Settlement" (PDF). Financial Industry Regulatory Authority (FINRA). Retrieved 10 December 2013.
  12. ↑ "Customers to Receive Approximately $12 Million in Restitution, Firm Fined $2.3 Million; President and Head Trader Fined and Suspended" (Press release). Washington, DC: Financial Industry Regulatory Authority, Inc. October 22, 2012. Retrieved 23 September 2016.
  13. ↑ Phillips, Ted (April 4, 2013). "Class-action suit against David Lerner Associates dismissed". Newsday. Retrieved 10 December 2013.
  14. ↑ Singer, Bill (April 4, 2013). "David Lerner And Apple REITs Defendants In Stunning Class Action Victory". Forbes. Retrieved 10 December 2013.
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