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David Lerner Associates settles charges related to nontraded REITs sales

David Lerner Associates Inc. has agreed to pay $650,000 to the New Jersey Bureau of Securities to settle charges related to the company's sale of nontraded real estate investment trusts statewide.

Under the settlement, David Lerner Associates agreed to pay civil penalties to resolve several charges, including a finding that the company sold nontraded REITs and other alternative products deemed unsuitable to certain investors, according to the bureau. Nontraded REITs are generally less liquid than their publicly traded counterparts, while often carrying higher risks and fees, the bureau said in a statement.

Between March 2006 and December 2010, the company raised an aggregate of $4 billion through the sale of three nontraded REITs, the bureau said in a news release. The transactions included the sale of nontraded REITs to investors who failed to meet suitability standards listed in the products' prospectus, according to the bureau's investigation.