Dr. Robert Froehlich, who recently resigned as the lead independent director of two AR Global-sponsored non-traded REITs, submitted a follow-up letter requesting that the company correct certain statements that he claims were reported incorrectly and in a misleading fashion in public filings with the Securities and Exchange Commission.
Froehlich previously charged that there was a serious conflict of interest with Nick Radesca serving as both the chief financial officer of Realty Finance Trust and American Finance Trust since the two are engaged in discussions about an undisclosed merger, as reported by The DI Wire last month.
He stated in a previous letter to the board of RFT that he would be forced to resign to preserve his reputation if two actions were not met. He requested that the board require Radesca to step down from one of his CFO positions, and that the audit committee engage the services of an unnamed financial advisor “to conduct a full scope analysis of alternatives in a manner consistent with the basic tenets of sound governance.” Neither of Froelich’s demands were met, and he subsequently resigned from the boards.
It was mentioned in the original SEC filing that appointing a financial advisor would require a majority vote of the audit committee.
The filing stated that, “The process of independent financial advisor evaluations has not been completed by the committee and therefore the company is not currently prepared to accede to Froehlich’s demand that the committee appoint his chosen independent financial advisor.”
Froehlich responded that the committee interviewed three firms in New York City that could potentially serve as financial advisor to the company. His first choice differed from another independent director, Betty Tuppeny, so he “compromised and agreed” to go with Tuppeny’s first choice since both were worthy candidates. He claims that the committee unanimously approved to hire the unnamed firm, so it was misleading to word the aforementioned statement as “his chosen independent financial advisor.”
Froehlich wrote, “you make it appear as if I was trying to impose my view and my will on the entire special committee and that could not be further from the truth…These comments are not only untrue and misleading, they are damaging to my professional and personal reputation.”
He also took issue with statements made about the rescheduling of certain board meetings, as well as disclosures he demanded be included in the company’s quarterly filings.
Froehlich indicated that there were other “misstatements and twisting of the truth” that he is willing to let go, although he did make one final comment to the board before closing his letter.
“I find it strange that it took five days (four business days and one weekend day) before it was disclosed to shareholders that their lead independent director and audit committee chair had resigned,” said Froehlich. “Especially when there was a proxy ballot in their hands. I would think that anyone that cast any proxy vote during the four days when RFT was silent on this issue would have been a better informed shareholder when casting their proxy had it been disclosed in a more timely fashion.”
The entirety of the filing and Dr. Froehlich’s letter can be viewed on the SEC’s Edgar site.