REIT Manager W.P. Carey & Co has reached a $30M settlement agreement with the SEC over antifraud charges.
According to the SEC, W.P. Carey, its ex-CFO John J. Park, and its former chief accounting officer Claude Fernandez paid $10 million in undisclosed compensation to a brokerage firm that sold real estate investment trusts (REITs). The three parties then misrepresented these moneys in periodic filings to keep the compensations secret.
These activities allegedly benefited the broker-dealer and W.P. Carey, which received larger fees as a result, including $6.4 million in reimbursements and illegal fees. Park and Fernandez are accused of using fake invoices to hide the payments and get around the regulatory limitations about compensation.
The SEC says W.P. Carey is supposed to disclose such payments and that investors are entitled to know whether a brokerage firm is being compensated when making a sale.
The commission is also accusing W.P. Carey of taking part in a $235 million illegal and uregistered offering of REIT shares and being responsible for a broker-dealer receiving $100,000 from two REIT’s for proxy solicitation services. The SEC Is also accusing W.P. Carey of failure to comply with other disclosure requirements.
W.P. Carey has agreed to pay $20 million in interest and disgorgement and $10 million in penalties, which will be given to REITs that were adversely affected by the scheme.
Park, who is now in charge of W.P. Carey’s strategic planning, will pay a $240,000 penalty and serve a five-year ban from that prevents him from working as a director or officer of a public company. Claude Fernandez, now W.P. Carey’s managing director, is suspended for two years and will pay a $75,000 fine. All three defendants are permanently enjoyed from violating federal securities laws.
Shepherd Smith and Edwards represents victims of investor fraud in arbitration and in court. Our stockbroker fraud lawyers have helped thousands of people across the United States get their money back.
Related Web Resources:
What Are REITs?, Investopedia.com