In a bizarre twist, the former compliance officer for broker-dealer Cabot Lodge Securities, who earlier this month sued its owner, Jacob Frydman, and then filed a whistleblower complaint with the Securities Exchange Commission, late Friday recanted his charges of fraud.
The former Cabot Lodge executive, Al Akerman, on Feb. 6 sued Mr. Frydman and Cabot Lodge in New York State Supreme Court, alleging he was fired in December after reporting “certain improprieties” to authorities, including the Financial Industry Regulatory Authority Inc. The specific details of transactions in question, however, were redacted in the complaint.
A week later on Feb. 13, Mr. Akerman sent a letter to the SEC's Office of the Whistleblower regarding "apparent accounting irregularities and alleged fraud with United Realty Trust Inc.," a nontraded real estate investment trust of which Mr. Frydman is the chief executive. Cabot Lodge is the wholesaling and marketing broker-dealer that distributes the nontraded REIT to at least 30 independent broker-dealers.
Now, Mr. Akerman says he will retract his whistleblower claims and that he will dismiss the lawsuit he filed on Feb. 6.
In Mr. Akerman's latest letter to the SEC's Office of the Whistleblower, he writes: “I was wrong in sending that whistleblower letter to you.”
“Based upon information I have since received, I now know that the statements I made in the letter were false,” according to the letter, which does not describe what Mr. Akerman learned to change his mind. “I hereby retract and withdraw the letter and all of my statements therein.”
“I sent the letter to you based on apparent misrepresentations made to me by a third party,” according to the letter, which does not name the source. “I now believe that there was no wrongdoing or impropriety on the part of” Mr. Frydman, Cabot Lodge or United Realty Trust Inc., a nontraded real estate investment trusts for which Cabot Lodge is the marketing and distributing broker-dealer.
“I ask that you take no further action in connection with this matter,” according to the letter. “I apologize for any difficulties that I have created.”
In an interview Friday, Mr. Akerman said a response this week to the SEC by United Realty Trust, the REIT Mr. Frydman controls, to his whistleblower claim convinced him he was wrong.
“I came upon new information in that response from their lawyer, Dan Edelman,” Mr. Ackerman said. “I looked at it and realized there was a difference, that there was enough in there to realize I wasn't completely informed and that's why I retracted,” he said, declining to point to specifics in the REIT's response.
When asked if he had been compensated in some way for changing his mind, Mr. Akerman said he had not.