Broker-dealer network National Planning Holdings Inc.'s member firms, including INVEST Financial Corp., Investment Centers of America, Inc., National Planning Corp. and SII Investments, Inc. all announced the suspension of sales of the American Realty Capital Properties, Inc. nontraded real estate investment trust (REIT) due to problems with American Realty's accounting department.
At issue is an allegedly deliberate multi-million dollar accounting error at American Realty, whose Chief Financial Officer, Brian Block, has since been replaced by Michael Sodo, with Chief Accounting Officer Lisa McAlister out in favor of Gavin Brandon.
Specifically, American Realty Capital's audit committee discovered a $12 million error for the three months ending in March 2014 and an additional $10.9 million inaccuracy for the period ending in June 2014, concluding that the errors were "identified but intentionally not corrected," further stating that other financial statement errors were "intentionally made."
As a result of the $23 million in errors, American Realty Capital's net losses were understated through June 30, 2014.
The National Planning Holdings firms responded to the announcement of the accounting snafus by suspending sales of American Realty Capital's Phillips Edison - ARC Grocery Center REIT II, which has just $207 million in total assets.
In addition to prohibiting brokers from soliciting trades in American Realty Capital, the national network's firms also are requesting that wholesaling broker-dealer Realty Capital Securities return any outstanding unprocessed sales orders from firm advisers and investors while asking American Realty Capital to discontinue dividend reinvestments and similar automated rollover transactions on nontraded REITs no longer up for sale.
If you have invested in American Realty Capital Properties, Inc.'s REITs or other complex securities sponsored by American Realty Capital's affiliated companies, and such investment activity has proven harmful to your financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
News: National Planning Holdings puts kibosh on ARC nontraded REIT sales (InvestmentNews)