Inland Western Retail Real Estate Trust Inc. Securities Litigation
City of St. Clair Shores General Employees Retirement System v. Inland Western Retail Real Estate Trust, Inc. et al.
Complaints:
Press Releases:
- January 30, 2008: C&T Appointed as Co-Lead Counsel in Securities Class Action Pending Against Inland Western Retail Real Estate Trust, Inc.
- November 5, 2007: Press Release on Commencement of Action
Other:
After being appointed as Co-Lead Counsel in this Action, on June 12, 2008, Chimicles & Tikellis LLP filed an Amended Complaint in the United States District Court for the Northern District of Illinois (Case 07 C 6174) alleging violations of the federal securities laws and breaches of fiduciary duty by defendant Inland Western Retail Real Estate Trust, Inc. ("Inland REIT") and certain of its directors, officers and affiliates, William Blair & Company, L.L.C. ("William Blair"), and KPMG LLP on behalf of a proposed class ("Class") of Inland REIT's shareholders who are entitled to vote on the Schedule 14A Proxy Statement ("Proxy") that was filed with the Securities and Exchange Commission on September 10, 2007, which Proxy is alleged to be materially false and misleading. The Complaint also includes derivative claims asserting wrongdoing on behalf of Inland REIT against certain defendants. The Original Complaint was filed on November 1, 2007 by Chimicles & Tikellis LLP in the United States District Court for the Northern District of Illinois (November 5, 2007 Press Release).
The Amended Complaint charges defendants with violations of the federal securities laws, including Sections 14(a) and 20 of the Securities Exchange Act of 1934, Rule 14a-9 promulgated thereunder. In addition, by virtue of the defendants' conduct, the Amended Complaint alleges that defendants have also breached their fiduciary duties owed to the proposed Class. The Proxy sought shareholder approval to merge Inland REIT's affiliated Advisor and Property Managers into Inland REIT for $375 million worth of the Company's stock ("Internalization"). These entities, which provided Inland REIT with property management services and acted as its business manager and supervisor of daily operations, were wholly-owned directly or indirectly by officers, directors and affiliates of Inland REIT. Thus, the Internalization was a $375 million self-dealing, affiliated transaction that must receive the utmost scrutiny by the Class and Inland REIT. The Amended Complaint charges that the Internalization did not stand up to that scrutiny.
This Amended Complaint seeks to remedy the wrongdoing that was, and continues to be, inflicted against the shareholders of Inland REIT who were asked to approve the self-dealing Internalization whereby the shareholders' fiduciaries improperly garnered millions in excessive and unjustifiable consideration. The Complaint includes allegations that the Proxy was materially false and misleading in that it:
- failed to state material information about the business and operations of the Property Managers and the Advisor;
- failed to disclose that the Advisor and Property Managers historically understated and underreported expenses, which resulted in an overvaluation of the Advisor and Property Managers in the Internalization;
- failed to disclose that Inland REIT historically overpaid fees to the Property Managers that were materially in excess of maximum levels disclosed in Inland REIT’s prospectuses, registration statements, Advisory Agreement and Articles of Incorporation, which resulted in an overvaluation of the Advisor and Property Managers in the Internalization;
- failed to state material information about the propriety of the Internalization and the derivation and fairness of the Internalization Consideration;
- included and utilized a false and misleading purported “fairness opinion” prepared by William Blair stating that $375 million for the Internalization was fair, from a financial point of view to the Shareholders; and
- included and utilized false and misleading financial statements of the Advisor and Property Managers, appended to which were false and misleading independent auditors’ reports prepared by Defendants’ auditor, KPMG.
The Action also asserts direct claims for breaches of fiduciary duty, and aiding and abetting breaches of fiduciary duty, on behalf of Inland REIT Shareholders against certain Defendants, and asserts derivative claims for breach of fiduciary duty, unjust enrichment and breach of contract on behalf of Inland REIT against the Advisor, the Property Managers and/or certain Individual Defendants. The Amended Complaint alleges that Defendants made choices that were in their own self-interest and against the best interests of the Shareholders and the Company, in breach of the contractual and common law fiduciary duties they owed to the Shareholders and the Company by:
- failing to adhere to the language and terms of the Company’s Offering Documents, its agreement with the Advisor, and its Articles of Incorporation, by permitting Inland REIT to pay excessive fees to the Property Managers;
- circumventing contractual provisions, the Purchase Options, governing the Company’s acquisition of the Advisor and Property Managers;
- failing to supervise the relationships of the Company with the Advisor and Property Managers so that they would not become vehicles for self-dealing by Defendants; and
- formulating, proposing and consummating the self-dealing, improper Internalization that, to the detriment of the Shareholders and Company, significantly overvalued the Advisor and Property Managers because the financial results and performance of these entities were inflated by (a) the Property Managers’ receipt of excessive fee revenues; and (b) the material understatement of the Advisor’s and the Property Managers’ expenses.
If you are a former or current shareholder of Inland Western Retail Real Estate Trust, Inc., and wish to discuss this Action or have any questions concerning your rights or interests, please contact Co-Lead Counsel: