MISREPRESENTATION AND OMISSION.

$280,115.00

$14,000.00

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$160,424.13

$11,149.00

INITIAL STATEMENT OF CLAIM IN WHICH [CUSTOMER] WAS THE SOLE CLAIMANT WAS FILED MAY 24, 2013. ON OR ABOUT JULY 19, 2013 AMENDED STATEMENT OF CLAIM WAS FILED ADDING [SPOUSE] AS A CLAIMANT.

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$163,019.89

$180,000.00

PURSUANT TO THE TERMS OF THE SETTLEMENT AGREEMENT IN EXCHANGE FOR THE MONETARY AMOUNT, DLA AGREED TO REPURCHASE CLAIMANTS APPLE REITS UNITS.

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$170,992.25

$30,331.00

AS PART OF THE CONDITION OF THE SETTLEMENT THE CASE WAS DISMISSED.

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$100,996.35

$40,520.00

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$92,180.68

$3,632.48

MATTER WAS SETTLED WHEREIN ALL ALLEGATIONS OF WRONG DOING OR LIABILITY ASSERTED WERE DENIED. CLAIMANT AGREED TO SETTLE THIS MATTER BY SELLING HER REIT TO A THIRD PARTY AND AS PART OF THE SETTLEMENT AGREEMENT RESPONDENT DLA AGREED TO REIMBURSE CLAIMANT FOR THE SALES COMMISSION AND TRANSACTION FEE.

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD

$250,000.00

$12,500.00

UNSUITABLE

$230,000.00

$35,000.00

ILLINOIS

OCT. 22, 2012 FINRA ENTERED AWC IN #020741901 WHICH: (A) SUSPENDED RESP. 1 YEAR/ANY CAPACITY; (B) SUSPENDED RESP. 2 YEARS AS SUPERVISORY; (C) FINED RESP $250,000

Consent

Revocation

APPEARS TO BE NAMED SOLELY BECAUSE NAME APPEARS ON FORM BD.

$558,777.00

$260,000.00

THE JUNE 23, 2014 ARBITRATION PANEL DECISION IN THIS MATTER, WHICH DIRECTED DLA TO REPURCHASE CLAIMANTS' APPLE REIT UNITS (PURCHASED AT $11.00 PER SHARE) AT $7.00 PER SHARE, CONTAINED NO FINDING OF LIABILITY AGAINST DAVID LERNER, WHO APPEARED TO HAVE BEEN NAMED SOLELY BECAUSE HIS NAME APPEARED ON DLA'S FORM BD, AND DID NOT ASSESS ANY DAMAGES AGAINST HIM . MR. LERNER WAS NEITHER REQUIRED NOR ASKED TO CONTRIBUTE TO THE AWARD.

FINRA

SEC SECTIONS 17(A)(1), 17(A)(2) AND (A)(3) OF THE SECURITIES ACT OF 1933, FINRA RULE 2010, NASD RULE 2210(D)(1): LERNER'S MEMBER FIRM RECOMMENDED AND SOLD OVER $442 MILLION OF A $2 BILLION NON-TRADED REAL ESTATE INVESTMENT TRUST (REIT) WITHOUT PERFORMING ADEQUATE DUE DILIGENCE IN VIOLATION OF ITS SUITABILITY OBLIGATIONS. EARLIER REITS UNDER THE SAME MANAGEMENT INAPPROPRIATELY VALUED THE REITS' SHARES AT A CONSTANT ARTIFICIAL PRICE NOTWITHSTANDING YEARS OF MARKET FLUCTUATIONS, PERFORMANCE DECLINES, INCREASED LEVERAGE AND EXCESSIVE RETURN OF CAPITAL TO INVESTORS. LERNER'S FIRM, IN ITS CAPACITY AS BEST EFFORTS UNDERWRITER FOR ALL OF THE REITS, CONTINUES TO SOLICIT THOUSANDS OF CUSTOMERS TO PURCHASE THE REIT WITHOUT PERFORMING ADEQUATE DUE DILIGENCE TO DETERMINE THAT THERE IS A REASONABLE BASIS TO RECOMMEND THE SECURITY TO ANY CUSTOMER. LERNER HAVE MADE FALSE, EXAGGERATED AND MISLEADING CLAIMS REGARDING THE INVESTMENT RETURNS, MARKET VALUES, PERFORMANCE AND PROSPECTS OF THE CLOSED REITS TO OVER A THOUSAND CUSTOMERS DURING AT LEAST FOUR OF HIS FIRM'S INVESTMENT SEMINARS. THE FIRM, THROUGH LERNER AND OTHER REPRESENTATIVES, REPEATEDLY GAVE SEMINAR PRESENTATIONS TO INVESTORS USING SEMINAR SLIDES THAT WERE NOT FAIR AND BALANCED AND DID NOT PROVIDE A SOUND BASIS FOR EVALUATING THE FACTS IN REGARD TO THE REITS PROGRAMS. LERNER MADE ORAL PRESENTATIONS REGARDING THE REITS AT SEMINARS. THESE SEMINAR PRESENTATIONS CONSTITUTED A PUBLIC APPEARANCE AND WERE COMMUNICATIONS WITH THE PUBLIC UNDER THE FINRA ADVERTISING RULES. THE SEMINAR SLIDES AND LERNER'S SEMINAR PRESENTATIONS ALSO OMITTED NUMEROUS MATERIAL FACTS AND QUALIFICATIONS THAT CAUSED THE COMMUNICATIONS TO BE MISLEADING. THE SEMINAR SLIDES AND LERNER'S SEMINAR PRESENTATIONS CONTAINED NUMEROUS FALSE, EXAGGERATED, UNWARRANTED OR MISLEADING STATEMENTS AND CLAIMS REGARDING THE VALUATIONS, PERFORMANCE, PROSPECTS, RISKS, AND PRACTICES OF THE REIT PROGRAMS, AS WELL AS CUSTOMER INSURANCE PROTECTION THROUGH THE FIRM AND THE PROSPECTS FOR A MERGER OF THE CLOSED REITS. TO COUNTER NEGATIVE MEDIA ATTENTION REGARDING THE FIRM AND THE REITS FOLLOWING THE FILING OF THE ORIGINAL COMPLAINT IN THIS PROCEEDING, LERNER SENT LETTERS TO ALL OF THE FIRM'S CUSTOMERS. LERNER SIGNED THESE LETTERS, EACH OF WHICH WAS MAILED TO OVER 50,000 CUSTOMER HOUSEHOLDS. LERNER'S LETTERS TO CUSTOMERS OMITTED MATERIAL INFORMATION CAUSING THE COMMUNICATION TO BE MISLEADING. THE LETTERS ALSO CONTAINED EXAGGERATED, FALSE, AND MISLEADING STATEMENTS REGARDING THE VALUATIONS, PERFORMANCE, PROSPECTS, RISKS, AND PRACTICES OF THE REIT PROGRAMS. ONE OF THE LETTERS MADE EXAGGERATED CLAIMS REGARDING FINRA'S NO OBJECTIONS OPINION REGARDING THE FAIRNESS AND REASONABLENESS OF THE UNDERWRITING TERMS AND ARRANGEMENTS. THE OTHER LETTER MADE UNWARRANTED, EXAGGERATED, AND MISLEADING CLAIMS REGARDING A POTENTIAL OPPORTUNITY FOR CLOSED REIT SHAREHOLDERS TO PARTICIPATE IN CONSOLIDATION, SALE, LISTING ON A NATIONAL EXCHANGE, OR OTHER EVENT THAT WOULD ALLOW THEM TO DISPOSE OF THEIR ILLIQUID SHARES. TO INDUCE NEW AND EXISTING CUSTOMERS TO PURCHASE THE REIT, LERNER AND THE FIRM MADE UNTRUE REPRESENTATIONS OF MATERIAL FACT OR OMISSIONS OF MATERIAL FACT REGARDING THE PRIOR PERFORMANCE, STEADY DISTRIBUTION RATES, UNCHANGING VALUATIONS, AND PROSPECTS OF THE CLOSED REITS AND/OR THE CURRENT REIT. LERNER AND THE FIRM MADE THE UNTRUE STATEMENTS AS ALLEGED AND OMITTED THE MATERIAL FACTS AS ALLEGED WITH INTENT TO DEFRAUD INVESTORS OR WITH RECKLESSNESS. LERNER AND THE FIRM MADE INTENTIONAL OR RECKLESS MISREPRESENTATIONS AND OMISSIONS AT SEMINARS, IN SEMINAR MATERIALS, AND IN LETTERS TO CUSTOMERS. THE FIRM'S AND LERNER'S USE OF THE SEMINARS, SEMINAR MATERIALS, AND LETTERS TO CUSTOMERS CONSTITUTED A FRAUDULENT OR DECEITFUL PRACTICE OR COURSE OF BUSINESS TO OFFER OR SELL REIT TO INVESTORS.

Decision & Order of Offer of Settlement

Requalification

Restitution

$250,000.00

Suspension

ANY CAPACITY

ONE YEAR

11/19/2012

11/18/2013

ANY PRINCIPAL CAPACITY

TWO YEARS

11/19/2013

11/18/2015

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LERNER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS ORDERED TO PAY RESTITUTION OF $250,000, TO BE ADDED TO THE SETTLEMENT FUND ESTABLISHED PURSUANT TO THIS OFFER, AND TO BE USED FOR THE SAME PURPOSES AS THAT FUND, ORDERED TO REQUALIFY AS A GENERAL SECURITIES REPRESENTATIVE (SERIES 7) AND GENERAL SECURITIES PRINCIPAL (SERIES 24) PRIOR TO ASSOCIATING WITH A FINRA MEMBER, SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR ONE YEAR, AND FOLLOWING THE ALL CAPACITIES SUSPENSION, SUSPENDED FROM ACTING IN ANY PRINCIPAL CAPACITY WITH ANY FINRA MEMBER FOR TWO YEARS. THE SUSPENSION IN ANY CAPACITY IS IN EFFECT FROM NOVEMBER 19, 2012, THROUGH NOVEMBER 18, 2013. THE SUSPENSION IN ANY PRINCIPAL CAPACITY IS IN EFFECT FROM NOVEMBER 19, 2013, THROUGH NOVEMBER 18, 2015.

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, LERNER CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS ORDERED TO PAY RESTITUTION OF $250,000, TO BE ADDED TO THE SETTLEMENT FUND ESTABLISHED PURSUANT TO TERMS OF THE SETTLEMENT, AND TO BE USED FOR THE SAME PURPOSES AS THAT FUND, ORDERED TO REQUALIFY AS A GENERAL SECURITIES REPRESENTATIVE (SERIES 7) AND GENERAL SECURITIES PRINCIPAL (SERIES 24) PRIOR TO ASSOCIATING WITH A FINRA MEMBER, SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR ONE YEAR, AND FOLLOWING THE ALL CAPACITIES SUSPENSION, SUSPENDED FROM ACTING IN ANY PRINCIPAL CAPACITY WITH ANY FINRA MEMBER FOR TWO YEARS. THE SUSPENSION IN ANY CAPACITY IS IN EFFECT FROM NOVEMBER 19, 2012, THROUGH NOVEMBER 18, 2013. THE SUSPENSION IN ANY PRINCIPAL CAPACITY IS IN EFFECT FROM NOVEMBER 19, 2013, THROUGH NOVEMBER 18, 2015.

SOC DESCRIBES, MISREPRESENTATION, BREACH OF CONTRACT, VIOLATIONS OF SUITABILITY AND KNOW YOUR CUSTOMER RULES, VIOLATIONS OF VARIOUS STATUTES OF CONNECTUCUT LAW AND OF SECTION 12 OF THE SECURITIES ACT.

$3,718,985.70

$645,154.66

THIS WAS AN ANCILLARY PROCEEDING, IN AID OF AN ARBITRATION BEARING THE SAME TITLE, PARTIES AND ALLEGATIONS. THE ANCILLARY PROCEEDING WAS SETTLED SIMULTANEOUSLY WITH THE SETTLEMENT OF THE ARBITRATION.

SOC DESCRIBES MISREPRESENTATION, VIOLATIONS OF FINRA'S SUITABILITY KNOW YOUR CUSTOMER RULES VIOLATION OF SECTION 12 OF THE SECURITIES ACT AND VIOLATIONS OF VARIOUS STATUTES OF CONNECTICUT STATE LAW.

$3,718,985.10

$645,154.66

NASD

NASD RULES 2110, 2210(D)(1)(A), 2210(D)(1)(B) - DAVID LERNER DEVELOPED IDEAS FOR RADIO ADVERTISEMENTS, NARRATED THE RADIO SPOTS, AND WAS THE "VOICE" OF THE FIRM IN RADIO ADS THAT DID NOT HAVE FACTUAL SUPPORT FOR THE STATEMENTS MADE OR OMITTED INFORMATION NECESSARY TO EVALUATE THE CLAIMS MADE, MAKING THE STATEMENTS OR CLAIMS EXAGGERATED, UNWARRANTED, OR MISLEADING; THE RADIO ADS USED EXAMPLES OF PEOPLE WITH WHOM LERNER ALLEGEDLY CAME INTO CONTACT; GAVE INVESTMENT SEMINAR PRESENTATIONS THAT CONTAINED STATEMENTS AND CLAIMS THAT OMITTED INFORMATION NECESSARY TO EVALUATE THE CLAIMS MADE, MAKING THE STATEMENTS OR CLAIMS EXAGGERATED, UNWARRANTED, OR MISLEADING; FAILED TO DISCLOSE SUITABILITY AND LIQUIDITY ISSUES REGARDING INVESTMENTS IN PRESENTATIONS; PROMOTED REIT PROGRAMS AT SEMINARS THAT FAILED TO ADEQUATELY DISCLOSE THE LIMITATIONS OF THE REDEMPTION PROGRAM OF THE REIT AND THE LACK OF A SECONDARY MARKET AND OMITTED INFORMATON NECESSARY TO EVALUATE THE CLAIMS MADE AND FAILED TO DISCLOSE RISKS ASSOCIATED WITH THE INVESTMENT.

Decision & Order of Offer of Settlement

Censure

Civil and Administrative Penalty(ies)/Fine(s)

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, RESPONDENT CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS CENSURED AND FINED $25,000, JOINTLY AND SEVERALLY. FINES PAID.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Decision & Order of Offer of Settlement

Monetary/Fine

$5,000.00

Censure

MUCH OF THE DISPUTE WITH THE NASD OVER THE FIRM'S ADVERTISEMENTS CONCERNED THE MANNER OF ADVERTISING OF NEW INVESTMENT PRODUCTS, FOR WHICH LITTLE PRIOR REGULATORY GUIDANCE WAS AVAILABLE. AS A RESULT OF THE FULL SETTLEMENT REACHED WITH THE NASD OVER OUR DIFFERENCES, DAVID LERNER ASSOCIATES IS PERMITTED TO CONTINUE ITS ADVERTISING PROGRAM FOR ITS INVESTMENT SERVICES (PARTICULARLY ITS DAVEY MAE PROGRAM) IN A MANNER ACCEPTABLE BOTH TO THE FIRM AND THE NASD. WE CONTINUE TO ADHERE TO A PHILOSOPHY OF ACCURATE AND COMPLETE ADVERTISING AND HAVE INSTITUTED PROCEDURES TO ENSURE THIS END.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Consent

Monetary/Fine

$2,500.00

Censure

NOT PROVIDED

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Acceptance, Waiver & Consent(AWC)

Censure

NOT PROVIDED