Chattanooga-based CBL & Associates Properties, Inc. (NYSE:CBL) said Monday it has confirmed that the Securities and Exchange Commission is looking into four CBL loans dating back to 2011 and 2012.
CBL officials said it has engaged the accounting firm of Ernst & Young to also examine the loans and they believe the matter will be resolved.
Following a report in the Wall Street Journal about the probe, CBL's stock price took a sharp drop and a federal lawsuit was filed by one of its shareholders, alleging fraud.
CBL officials said, “For more than two weeks, we have been using every available resource to determine whether there is an investigation by a governmental agency underway with respect to our company’s loan procedures as alleged in a media report.
"For the first time, on Friday, June 10, 2016, as a result of our efforts, we learned in a discussion with the Securities and Exchange Commission (SEC) that it is conducting an investigation limited to four specific non-recourse secured loans originated in 2011 and 2012.
Specifically, the purpose of this review is to ensure the information provided to lenders regarding lease status reports, revenues and expected revenues, did not materially vary from the company’s financial statements.
"The agency welcomed our proactive outreach, as well as our commitment to commission an independent review of our procedures with respect to those loans. Ernst & Young has been engaged to conduct a swift and thorough investigation. The findings from that independent investigation will be provided to the SEC upon completion. We are confident that this will bring a positive resolution to this matter.
“As we’ve stated previously, at all times, our company operates with the utmost integrity and holds itself to the highest ethical standards. We have stringent policies and procedures in place to ensure all of our accounting and financial processes and reporting comply with applicable laws, rules and regulations.”