On September 8, 2019, VEREIT Inc., formerly known as American Realty Capital Properties, signed a Memorandum of Understanding providing for a $1.025 billion settlement of this high-profile shareholder class action.
On August 24, 2017, U.S. District Judge Alvin K. Hellerstein certified this securities fraud case as a class action, indicating that all factors for approving the class were met, including that the stock traded in an efficient market. Judge Hellerstein appointed Cohen Milstein’s client New York City Retirement Systems a class representative.
In January 2015, New York City Retirement Systems and other named plaintiffs, filed complaints in the U.S. District Court in New York claiming that American Realty Capital Properties (ARCP), now known as VEREIT, Inc., a real estate investment trust, and others violated federal securities laws by making false and misleading statements and by misrepresenting the company's business and prospects, and engaged in a scheme to deceive the market and a course of conduct that artificially inflated prices of American Realty securities. Specifically, the complaint alleges, ARCP misstated its adjusted funds from operations, or AFFO, a measure of REIT performance, by about $23 million total in the first and second quarters of 2014.
At the end of October 2014, the complaint further alleges, the company acknowledged the errors and that senior executives “had been aware of that falsity, but did not correct it.” As a result ARCP’s stock dropped more than 36% after the trust in October 2014 retracted information from about 18 months of financial reports and pushed out its chief financial officer and chief accounting officer for allegedly making intentional errors.
In June 2016 ex-ARCP Chief Accounting Officer, Lisa McAlister pled guilty to securities fraud and began cooperating with the government. Her cooperation led to a June 2017 conviction of ex-ARCP Chief Financial Officer, Brian Block. Block was convicted of securities fraud, two counts of filing false SEC reports, two counts of filing false certifications and one count of related conspiracy.
The case name is: In re American Realty Capital Properties Inc. Litigation, Case No. 1:15-mc-00040, U.S. District Court, Southern District of New York.