REIT firm pays $8 million SEC fine over misleading accounting

REIT firm pays $8 million SEC fine over misleading accounting
Vereit Inc. agreement follows $1 billion litigation settlement in September
NOV 20, 2019
Vereit Inc., a real estate investment company, agreed to pay an $8 million fine to the Securities and Exchange Commission this week over accounting irregularities dating back five years. The settlement, announced by Vereit Monday, brings to a close the SEC's investigation of suspect accounting practices disclosed in an Oct. 29, 2014, SEC filing by American Realty Capital Properties Inc., which is the former name of Vereit. The company admitted to a $23 million accounting error. That revelation sparked a flurry of lawsuits as the company's stock plummeted. Investors argued that ARCP fudged its accounting numbers in order to inflate financial results and fuel acquisitions. In September, Vereit announced a $1 billion settlement of the class-action lawsuits, which resolved claims related to accounting disclosures ACRP made in October 2014 and March 2015 that restated earlier financial results. Vereit paid $738.5 million of the settlement. The balance was paid by other parties, including American Realty Capital, a former company executive and the company's auditor at the time of the accounting misstatements. [Recommended video: Michael Kitces: IBDs probably can't match zero commissions of Schwab, TD]​ ARCP was the flagship real estate investment trust managed by American Realty Capital, which was headed by its founder, Nicholas Schorsch. Last summer, Mr. Schorsch and American Realty Capital agreed to pay $60 million in penalties to settle SEC charges that he, the company and a partner wrongfully obtained millions of dollars in connection with REIT mergers managed by ARCP. This week's $8 million settlement over the agency's accounting investigation was made with the agency's staff and must be approved by the five SEC commissioners. "It's a significant sum," said Andrew Stoltmann, a Chicago securities attorney. "Any time the SEC fines someone $8 million, it's a head turner. That's a pretty clear indication that [the firm] did something wrong." A spokesman for Vereit declined to comment.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave