A recent article in the Wall Street Journal indicated that sales of Apple REIT 10 have declined significantly since the filing of the FINRA complaint against David Lerner Associates in late May 2011 alleging that the Long Island-based securities broker mislead investors in the way it marketed the product to investors.
According to the Wall Street Journal, in June 2011 Apple REIT 10 raised only $26.6 million, which is almost a 50% decline from the $51.2 million it raised in May 2011 (prior to the filing of the FINRA complaint). Real estate investment trust industry expert Robert A. Stanger commented that the Apple REIT 10 decline is contrary to the overall nontraded REIT market, which raised more money in June 2011 than it did the previous month.
Joseph Pickard, General Counsel for David Lerner Associates, places blame for the decline in sales on the FINRA complaint, the class action lawsuits, and associated negative press the firm received following the lawsuits.
The article also echoed FINRA's concerns with nontraded REITs go beyond David Lerner Associates and Apple REITs. The article describes FINRA's contemplated revised reporting requirements, where broker-dealers like David Lerner Associates would have to disclose the substantial upfront fees in the REIT valuations. FINRA would also require brokers to remove nontraded REIT valuations that the firm believes are inaccurate.
Despite the article, Apple REIT investors are still holding investments that are substantially depreciated, and with the flood of redemption requests, effectively illiquid.
Fortunately, there may hope for Apple REIT investors through FINRA arbitration. If you are an investor who is trying to get out of the Apple REITs, please contact one of our attorneys at 312-332-0000 to discuss your recovery options. Our attorneys are representing investors who have suffered losses investing in the Apple REITs along with those who are seeking to rescind (get out of) their investment in these products.
Eccleston Law represents individual and institutional investors nationwide to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.
FinancialCounsel.com, hosted by James J. Eccleston, is a companion website to this blog, along with EcclestonLaw.com. It contains complementary material of general interest to investors and financial services professionals. Investors will find material on securities arbitration to recover investment losses; industry and financial markets intelligence; and strategies for estate planning. Professionals have access to material on broker/adviser registration, regulation, compliance and disciplinary proceedings; industry and financial markets intelligence; strategies for estate planning; and broker/adviser employment litigation and injunctions, including defamation and non-competition/solicitation issues. 
