Lowenstein Sandler obtained a $42.5 million settlement agreement with real estate operating company VEREIT to resolve lawsuits our firm brought on behalf of four investment fund clients that opted out of a contemporaneous class action. VEREIT is the successor entity to defendant American Realty Capital Properties Inc. (ARCP), a real estate investment trust.
Working with Lowenstein’s Securities Litigation team, our clients opted out of a securities class action against ARCP and, instead, filed a number of individual securities actions in the U.S. District Court for the Southern District of New York against the defendant and several of its former senior executives in connection with accounting fraud at the company. The suits sought to recover investment losses suffered as a result of ARCP’s intentional overstatement of its adjusted funds from operations (AFFO) for 2013 and for the first quarter of 2014, and its subsequent attempt to conceal its overstated AFFO in the second quarter of 2014. The complaints asserted federal claims for violations of Sections 10, 11, 18, and 20 of the Securities Act or Exchange Act, as well as state law claims for common law fraud.
The resolution of this case is significant as it demonstrates the effectiveness of investors exercising their right, established under the U.S. Supreme Court’s 2017 decision in California Public Employees’ Retirement System v. ANZ Securities, Inc., et al., to bring individual securities fraud claims within a three-year statute of repose despite the existence of an ongoing class action regarding the same claims.