The Financial Industry Regulatory Authority (“FINRA”) has released the restitution information for certain David Lerner Associates, Inc. (“DLA”) customers who purchased municipal bonds or Apple REIT 10.
Municipal Bond Customers
In October, FINRA fined DLA $2.3 million for charging excessive markups on certain municipal bond and collateralized mortgage obligations during the period January 2005 to January 2007. FINRA found that DLA charged excessive markups to its customers in more than 1,000 municipal bond transactions and over 1,700 CMO transactions during this 2 year period.
According to the Order Accepting Offer of Settlement dated October 22, 2012, DLA agreed to pay restitution in the amount of $597,695.21 to investors who were subjected to the unfair pricing practices.
Customers, who are eligible for restitution, will automatically receive payment from DLA by no later than December 6, 2012. Bond holders are not required to sell, exchange, or redeem their municipal bonds in order to receive payment.
If DLA is unable to locate any customer, after exhausting all reasonable efforts, the customer’s restitution payment will be forwarded to the abandoned property fund of the state in which the customer’s last known residence address is located.
Apple REIT 10 Investors
Also in the October Order, DLA was ordered to pay $12 million in restitution to certain customers who invested in Apple REIT 10, a $442 million non-traded real estate investment trust that invests in extended stay hotels. According to FINRA, not all Apple REIT 10 holders are eligible for restitution from the settlement fund. Eligibility for payment will be determined by FINRA staff and an independent consultant by December 22, 2012.
Apple REIT 10 customers who are determined to be eligible for remediation will receive payment from the independent consultant by no later than January 22, 2013. Shareholders are not required to sell, exchange, or redeem their Apple REIT 10 shares in order to receive payment.
If the independent consultant is unable to locate any customer, after exhausting all reasonable efforts, the customer’s restitution payment will be forwarded to the abandoned property fund of the state in which the customer’s last known residence address is located.
Customers who receive restitution payments are not foreclosed from filing an independent arbitration action if they believe they have suffered losses as a result of unfair pricing practices or unsuitable investments.
Investors with additional questions about the DLA remediation plan may contact FINRA’s Office of Investor Education at (202) 728-8827.
The Florida securities lawyers at McCabe Rabin, P.A. represent investors nationwide in FINRA arbitration matters. Investors nationwide who have incurred recoverable investment losses of at least $100,000 due to specific failures by stockbrokers and brokerage firms, and who may have a FINRA arbitration claim, may contact the Florida securities lawyers at McCabe Rabin, P.A. for a free and confidential consultation by calling toll free at 877.915.4040 or by e-mail to email@example.com.