Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
AR Global Wins Dismissal in REIT Shareholder Merger Challenge
- Client News
- September 23, 2019
Practices
Paul, Weiss achieved a significant victory on behalf of AR Global and its executives when a judge dismissed, with prejudice, a shareholder lawsuit challenging the 2017 merger of two AR Global-sponsored REITs, American Finance Trust (AFIN) and Retail Centers of America.
The plaintiff, an AFIN shareholder, asserted federal claims under Sections 14(a) and 20(a) of the Exchange Act against AFIN, its outside advisor, American Finance Advisors, and/or AR Global executives. In her complaint, filed in the Southern District of New York, the shareholder alleged that the defendants issued materially misleading proxy materials in connection with the merger, arguing that the proxy failed to disclose that certain terms of the advisory agreement between the REIT and its outside advisor were too favorable for the advisor. The plaintiff also brought state law shareholder class action claims against the advisor, AR Global and two AR executives, CEO Nicholas Schorsch and AR Capital co-founder William Kahane, for breach of fiduciary duty and aiding and abetting.
In our motion to dismiss, the Paul, Weiss team argued, among other things, that the proxy materials were not materially misleading and were accompanied by robust disclosures, that the merger and advisory agreement were ratified by votes by independent directors and/or shareholders, and that the breach of fiduciary duty claim was derivative.
The matter was fully briefed and argued in front of U.S. District Judge Robert W. Sweet in September 2018; after Judge Sweet passed away in March 2019, the matter was transferred to U.S. District Judge Lorna G. Schofield. In her September 23 decision dismissing the case in full, Judge Schofield echoed all of our arguments.
The Paul, Weiss team included litigation partner Audra Soloway.