Tuesday, July 16, 2019

Attention Investors in AR Capital - It Settled SEC Charges for more than $60 Million.

The SEC charged AR Capital LLC, its founder Nicholas S. Schorsch, and its former CFO Brian Block with wrongfully obtaining millions of dollars in connection with two separate mergers between real estate investment trusts (REITs) that were sponsored and externally managed by AR Capital. The defendants agreed to settle the matter by, among other things, cumulatively agreeing to over $60 million in disgorgement, prejudgment interest and civil penalties.

The SEC's complaint, filed in federal district court in Manhattan, charges AR Capital and Block with violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder, and falsifying books and records of ARCP. The complaint charges Schorsch with negligently violating the anti-fraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933, as well as books and records violations.

Without admitting or denying the allegations in the complaint, AR Capital, Schorsch, and Block have consented to entry of a final judgment that imposes permanent injunctions from violations of the charged provisions; orders combined disgorgement and prejudgment interest on a joint-and-several basis of over $39 million, which includes cash and the return of the wrongfully obtained ARCP operating partnership units; and imposes civil penalties of $14 million against AR Capital, $7 million against Schorsch, and $750,000 against Block. The settlements are subject to court approval.

If you invested in these REITS, you may be entitled to compensation. Email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

No comments: