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Written by 7:05 pm Blog, Current Investigations

Update: American Realty Capital Properties (ARCP)

Have you suffered losses investing in American Realty Capital Properties (ARCP)? If so, the attorneys at The White Law Group may be able to help.

On September 8th, the Securities and Exchange Commission charged two former accounting executives with overstating the financial performance of a large publicly-traded real estate investment trust (REIT) then known as American Realty Capital Properties (now known as VEREIT) by purposely inflating a key metric used by analysts and investors to assess the company.

According to the SEC’s complaint, then-chief financial officer Brian S. Block and then-chief accounting officer Lisa P. McAlister devised a scheme to manipulate the calculation of ARCP’s adjusted funds from operations (AFFO), a non-GAAP measure used when the company provided earnings guidance.

After warnings from internal accounting staff that an incorrect method was used to calculate AFFO in ARCP’s 2014 first quarter financial results, Block allegedly falsified the company’s AFFO presentation in the final hours before filing the company’s second quarter results.  With McAlister in his office, Block plugged in fake numbers that concealed the first quarter overstatement of AFFO and made it appear that the company had met second-quarter estimates when, in fact, it had fallen short, according to reports.

AFFO was a key non-GAAP financial metric by which analysts and investors assessed the company’s performance, and AFFO per share was the primary measure for which the company provided earnings guidance.

SEC rules generally permit companies to present non-GAAP financial measures to convey supplemental information about how company management views the company’s results of operations in ways that GAAP results alone may not convey.  But companies cannot present non-GAAP measures in a way that is misleading.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Block and McAlister.

For more information on The White Law Group’s investigation of American Realty Capital Properties, click here.

The foregoing information, which is all publicly available here, is being provided by The White Law Group.

The White Law Group continues to investigate potential claims involving ARCP. If you suffered losses investing in American Realty Capital Properties or another ARC REIT and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at (888) 637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.

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