Articles Tagged with reit

According to published materials, two years ago the SEC started investigating, American Realty Capital Properties Inc (ARCP) and its executives, for allegedly overstating financial results and deliberate concealment of financial mistakes, which rattled the REIT brokerage empire built by Nicholas Schorsch. After investigations, the SEC reported that it recently brought charges against Brian S. Block and Lisa P. McAlister, the former chief financial and chief accounting officers of American Realty Capital Properties Inc.

The FBI announced Block’s arrest at his home in Pennsylvania on charges of securities fraud and conspiracy. In June, McAlister reportedly pled guilty to four securities fraud and false filing counts. According to the charges brought by the SEC, they are alleged to have intentionally inflated a key metric to make sure that the REIT met analysts’ estimates for the first two quarters of 2014. As per AdvisorHub, Block’s attorney was quoted saying “[t]here is little precedent for the notion that criminal charges are appropriate when accountants make decisions involving these sorts of accounting principles [non-GAAP principles applicable only to REITs].”

After ARCP, with apparent market capitalization of $11.5 billion, publicly disclosed its intentional errors and result inflation in 2014, Schorsch controlled REITs and holding companies lost billions of dollars and ten broker dealers filed for Chapter 11 bankruptcy.

Malecki Law’s team of investment attorneys are interested in speaking with those who invested in AR Global REITs. Industry analysts and consultants believe that investors in a number of AR Global-sponsored real estate investment trusts (REITs) are in danger of having their distributions cut, per InvestmentNews.

Specifically, investors in American Realty Capital Global Trust II, American Realty Capital New York City REIT, American Finance Trust, American Realty Capital Hospitality Trust, American Realty Capital Retail Centers of America, Healthcare Trust, and Realty Finance Trust may be at risk, according to the report.

The problem is said to stem from the MFFO (modified funds from operations a/k/a cash flow) at seven of AR Global’s REITs. The MFFO of these seven funds reportedly failed to match or exceed their distributions. In simple terms, this would mean that the funds failed to take in as much as they were distributing. Such a situation has the potential to mean big trouble for investors including distribution cuts and rapid decline in asset value – i.e., less income and large losses to the principal.

Malecki Law’s team of investment attorneys are interested in hearing from investors who have complaints regarding Wisconsin-based Sterne Agee Financial Advisor Chad Karl.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Karl is currently the subject of a pending customer dispute. The allegations include unsuitable investment recommendations, including an investment into real estate, per FINRA. According to the disclosures on Mr. Karl’s BrokerCheck, the customer is requesting $100,000 in damages.

Mr. Karl’s FINRA records indicate that he has also been the subject of two prior customer disputes since 2010. In 2014, a client alleged that “the non publicly traded REIT sold to her was unsuitable,” per FINRA. This case was reportedly settled for $50,000. The other customer complaint, filed in 2010, alleged $120,000 in damages for failure to “fully explain tax laws regarding the sale of the client’s stock portfolio,” according to BrokerCheck, and was ultimately withdrawn.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Jared Cohen.  Mr. Cohen is reportedly registered with Ameriprise Financial Services, Inc., based out of Armonk, NY.  He has also recently been registered with IDS Life Insurance Company, according to industry records.

According to BrokerCheck, as maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Cohen has been the subject of two customer complaints in the past six years.  Mr. Cohen has been the subject of complaint alleging misrepresentations of investment risk and over-concentration in non-traded Real Estate Investment Trusts (“REITs”), as well as misrepresentations surrounding the sale of preferred stock recommendations, per FINRA records.

Of these customer disputes, FINRA records indicate that one customer initiated a FINRA arbitration and recovered $25,000 in a settlement with Ameriprise.