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American Realty

Settlement of In re American Realty Capital Properties, Inc. Litigation
Civil Action No. 1:15-mc-00040-AKH

The parties have reached a settlement of this action, pending in the United States District Court for the Southern District of New York.  The settlement provides for the payment of $1.025 billion for the benefit of eligible Class Members.  Plaintiffs Teachers Insurance and Annuity Association of America, College Retirement Equities Fund, TIAA-CREF Equity Index Fund, TIAA-CREF Real Estate Securities Fund, TIAA-CREF Large Cap Value Index Fund, TIAA-CREF Small Cap Blend Index Fund, TIAA-CREF Life Real Estate Securities Fund, TIAA-CREF Life Equity Index Fund, and TIAA-CREF Bond Index Fund alleged that the Defendants violated the Securities Act of 1933 and/or the Securities Exchange Act of 1934 by making materially false and misleading statements or omitting to state material facts necessary to make statements made by Defendants in public filings and other public statements not misleading.  Among other things, Plaintiffs alleged that VEREIT, Inc. (f/k/a American Realty Capital Properties, Inc. (“ARCP”)) falsely inflated its financial results by violating Generally Accepted Accounting Principles, and improperly and artificially inflated its reported Adjusted Funds From Operations, a common measurement of REIT performance.  Plaintiffs alleged that Defendants used this manipulated picture of ARCP’s financial results to grow ARCP’s asset base, and achieved that growth largely through related-party transactions that paid certain Defendants, and companies they owned and controlled, hundreds of millions of dollars in “fees and commissions.”  Plaintiffs further alleged that when the true facts regarding the alleged misstatements were revealed, artificial inflation was removed from the price of ARCP Securities damaging members of the Class.

The Class consists of all Persons who purchased or otherwise acquired ARCP Securities between February 28, 2013 and October 29, 2014.  Excluded from the Class are:  Defendants, members of the immediate families of each of the Defendants, any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any Defendant, and the legal representatives, agents, affiliates, heirs, successors-in-interest, or assigns of any such excluded party.  For the avoidance of doubt, this exclusion does not extend to: (1) any investment company or pooled investment fund in which a Third-Party Underwriter Defendant may have a direct or indirect interest, or as to which its affiliates may act as an advisor, but of which a Third-Party Underwriter Defendant or its respective affiliates is not a majority owner or does not hold a majority beneficial interest; or (2) any employee benefit plan as to which a Third-Party Underwriter Defendant or its affiliates acts as an investment advisor or otherwise may be a fiduciary; provided, however, that membership in the Class by such investment company, pooled investment fund or employee benefit plan is limited to transactions in ARCP Securities made on behalf of, or for the benefit of, persons other than persons that are excluded from the Class by definition.  In other words, the Third-Party Underwriter Defendants cannot make a claim on their own behalf for their ownership share in any of the above entities.  The Class also excludes any person or entity that entered into a settlement agreement or otherwise provided a release to any Defendant relating to or arising from the purchase or other acquisition of ARCP Securities prior to October 29, 2014.  Also excluded from the Class is any Class Member that validly and timely requested exclusion in accordance with the requirements set by the Court in connection with the Notice of Pendency of Class Action previously provided to the Class.

The settlement was approved by the Court on January 21, 2020.

If you have any questions about the settlement or the litigation, please contact Rick Nelson at 1-800-449-4900.

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