With class action suits circulating against REIT barons David Lerner Associates, the fight over due diligence has now definitely spread to non-traded real estate trusts.
Long Island-based Lerner reportedly booked about $600 million over the last seven years selling $6 billion worth of various Apple Real Estate funds.
However, disgruntled clients now claim that the securities were overpriced and made unrealistic promises, and that as such Lerner failed to live up to its due diligence duties.
Another class action suit is starting up over here.
Lerner is still fighting the claims, calling them "frivolous."
I still don't get how this is a due diligence issue and not a disclosure issue, but "due diligence" is the hot phrase of the year, so maybe that's all this is.