Banks Law Office Announces Investigation of Non-Traded Real Estate Investment Trusts (REIT)
07/29/2011

Banks Law Office is investigating claims by investors nationwide who were sold non-traded real estate investment trusts (REITs) in light of recent action brought by the Financial Industry Regulatory Authority (FINRA) against David Lerner & Associates (DLA) for selling the non-traded REIT called Apple REIT Cos. Inc. to seniors without disclosing the risks of the investment.

Online PR News – 29-July-2011 – – Banks Law Office is investigating claims by conservative and moderate investors nationwide who were sold non-traded real estate investment trusts (REITs). The investigation began shortly after an action brought by the Financial Industry Regulatory Authority (FINRA) against David Lerner & Associates (DLA) for selling the non-traded REIT called Apple REIT Cos. Inc. to seniors without disclosing the risks of the investment, violating federal securities laws.

Last month, investors holding shares in Apple REIT Cos. Inc. received account statements that showed the longtime value of the shares as “not priced.” FINRA alleges that specific REIT registration statements and prospectuses failed to disclose material information concerning the value of shares of prior Apple REITs whose share value had declined significantly using a similar investment strategy. Additionally, the case alleges that David Lerner solicited such REIT purchases by means of false and misleading statements.

“The FINRA action is a step in the right direction, but the Apple REIT is just the tip of the iceberg. Non-traded REITs are often laden with fees, which decreases returns even in the best market conditions,” said Robert Banks, an investor lawyer for more than 26 years and founder of Banks Law Office. “These investments can’t be sold, and it is difficult if not impossible to figure out what they are really worth.”

The law firm is focusing its efforts on REIT abuses after hearing many complaints that financial advisors who sell non-traded REITs talk about them in glowing terms, without disclosing the downsides of these investments. The law requires that investment sales presentations by advisors working for brokerage firms be fair and balanced, and that financial advisors disclose all important information about investment, both good and bad.

The FINRA action is a step in the right direction but the Apple REIT is just the tip of the iceberg. Non-traded REITs are often laden with fees which decreases returns even in the best market conditions

“When financial advisors sell these REITs without explaining risks and pitfalls, investors have the right to receive a full refund, less any dividends they may have received,” added Banks. “This is especially true where the investors sought conservative or moderate investments, or where the REIT makes up a large portion of the investment portfolio.”

Banks went on to say that financial advisors often fail to mention that the commissions they earn from selling REITs are much greater than they would earn if they sold a real estate mutual fund.

The David Lerner brokerage has recommended and sold nearly $6.8 billion in Apple REIT shares as the exclusive selling agent. Banks noted that the Cole Credit Property Trust, another non-traded REIT, refunded a Rhode Island employee pension fund its $3 million investment last fall. The refund occurred when it became clear that the REIT investment was too risky for retirement money.

Several private class action lawsuits have been filed over the misrepresentation of the Apple REITs; however, Banks cautions all investors to carefully evaluate their options before joining a class action case.

“In my experience of representing investors for nearly 30 years, individuals with strong claims are almost always better off filing an individual claim rather than participating in a class action, where the returns to investors are often only pennies on the dollar,” said Banks. “We urge investors to consult with an experienced investor rights attorney and consider your options before concluding that your rights will be adequately protected by a class action lawsuit.”

Investors who were sold these non-liquidable investments may have an opportunity to recover their investments in individual cases through FINRA arbitration. If you wish to discuss this action, or have any questions concerning this notice or your rights, contact Banks Law Office toll-free at (800) 647-8130, or by email at info@bankslawoffice.com.

About Banks Law Office, P.C.

Banks Law Office (www.bankslawoffice.com) is a premier law firm in the area of investor rights that represents aggrieved investors throughout the United States who have suffered losses from negligence, greed and fraud by investment professionals. Since 1985, the firm has obtained settlements and awards in the many millions of dollars for their investor clients.

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