Class-action settlement is noteworthy because of its size
By Mike Lange/Financial Recovery Technologies
A proposed settlement resolves claims that American Realty Capital Properties Inc., now called
VEREIT, misrepresented its financial performance for fiscal year 2013 and the
first two quarters of 2014.
The settlement is noteworthy for its size. According to Cornerstone Research,[1] since
1996, less than 2 percent of securities class action settlements have exceeded $1
billion. If approved, American Realty Capital Properties (ARCP) will be the
tenth largest since the Private Securities Litigation Reform Act was passed.[2]
It’s also noteworthy for the amounts contributed by defendants
other than the issuer. ARCP is paying
$738.5 million. The rest – $286.5 million – is coming
from AR Capital and others ($225 million); ARCP’s ex-CFO ($12.5 million); and ARCP’s auditors
($49 million).
Finally, the settlement is noteworthy because post-class
distribution, it will give a basis for comparing recovery rates to class
members and opt-outs. According to
InvestmentNews,[3] last year the REIT paid $175 million to 9 institutional
investors – including Vanguard – that had exited the class to pursue their own
claims.
Something similar happened in last year’s mega-settlement with
Petrobras ($3 billion, #5 on the top 10 list). As here, the company there settled opt-out suits before resolving the
class suit. In both matters, the reduced
class size likely enhanced the parties’ ability to reach resolution of the
class action and given the outsized recovery, may well result in higher than
average payouts to class members.
In any event, assuming the opt-out returns are significantly higher
than class member recoveries, the ARCP settlement will further fuel the trend
we’re seeing of large investors opting-out of high profile fraud matters.
CLASS DEFINITION
All
persons and entities that purchased or otherwise acquired the common stock, preferred
stock, or debt securities of American Realty Capital Properties, Inc. or ARC
Properties Operating Partnership, LP during the period between February 28,
2013 and October 29, 2014.
IMPORTANT DATES AND DEADLINES
All persons and entities that purchased or otherwise acquired the
common stock, preferred stock, or debt securities of American Realty Capital
Properties, Inc. or ARC Properties Operating Partnership, LP during the period
between February 28, 2013 and October 29, 2014.
- Final Approval Hearing; January 21, 2020
- Deadline for Objecting to Settlement: December 31, 2019
- Claim Filing Deadline: January 23, 2020
- Exclusion Deadline: If you did not exclude yourself after the Notice of Pendency of Class Action, you are a Class Member and cannot exclude yourself at this point.
Resources:
[1] Cornerstone Research, Securities Class Action Settlements, 2018 Review & Analysis.
[2] Securities Class Action Clearinghouse, Top Ten by Largest Settlement.
[3] Bruce Kelly, Settlements at old Schorsch REIT could cost shareholders $730 million (10/13/2018).
About the Author:
No comments:
Post a Comment