In the Matter of Vereit, Inc. Admin. Proc. File No. 3-19831
Oct. 6, 2022
On June 23, 2020, the Commission instituted and simultaneously settled a cease-and-desist proceeding (the “Order”) against Vereit, Inc. (f/k/a American Realty Capital Properties, Inc.) (the “Company” or the “Respondent”). In the Order, the Commission found that from at least May 2014 until the Company’s initial disclosure on October 29, 2014, the Company, acting through its then Chief Financial Officer, Brian S. Block, and its then Chief Accounting Officer, Lisa McAlister, falsely reported and manipulated the Company’s Adjusted Funds from Operations, a key non-GAAP performance metric relied on by management, investors, and analysts to assess the Company’s financial performance. In the Order, the Commission ordered the Respondent to pay an $8,000,000 civil money penalty to the Commission. The Commission also created a Fair Fund (the “Fair Fund”), pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected could be distributed to investors harmed by the Respondent’s conduct described in the Order. See the Commission’s Order: Release No. 33-10793.
The Fair Fund is comprised of the $8,000,000 paid by the Respondent and has been deposited into an interest-bearing account at the U.S. Treasury’s Bureau of Fiscal Service. All interest will accrue for the benefit of the Fair Fund.
On August 28, 2020, the Commission appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfil the tax obligations of the Fair Fund.
On September 4, 2020, the Commission issued an order extending the time for the Division of Enforcement to propose a plan of distribution for the Fair Fund until March 31, 2021.
On May 31, 2023, the Commission published a notice of proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (the “Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-97625 and the Proposed Plan.
The Proposed Plan provides for the distribution of the Fair Fund, plus accrued interest, less any taxes and fees (the “Net Available Fair Fund”), to the related civil action, SEC v. AR Capital, LLC, No. 19-cv-06603-AT (S.D.N.Y.) (the “Civil Action”), for distribution to harmed investors in accordance with the Court’s approved distribution plan.
No comments were received on the Proposed Plan, and on July 7, 2023, the Commission issued an order approving the Proposed Plan and authorizing the transfer of the Net Available Fair Fund to the Civil Action. The Commission simultaneously posted the approved plan of distribution (the “Plan”). See the Commission’s Order: Release No. 34-97854 and the approved Plan.
For more information, please contact the Commission:
Office of Distributions