Lodging Fund REIT III Inc., a publicly registered non-traded real estate investment trust, disclosed that the Securities and Exchange Commission issued a Wells notice to the company’s advisor, Legendary Capital REIT III, LLC, as well as to its senior executive, Cory Maple, on Sept. 12, 2022.
The Wells notice follows an investigation conducted by the SEC into the reimbursement of and financial accounting for certain expenses incurred by Legendary Capital REIT III, as well as the adequacy of its disclosures related to those policies and practices.
The investigation was launched by the SEC in December 2020. The Wells notice indicates that SEC staff has made a preliminary determination to recommend that the commission bring an enforcement action against Legendary Capital REIT III for possible violations of the securities laws. Corey R. Maple, chairman of the board and chief executive officer of the Lodging Fund REIT III, as well as a principal of Legendary Capital REIT III, also received a Wells notice as a result of the same investigation.
“We appreciate the vital role of the SEC and have fully cooperated with their investigation. We have always sought, both in our ongoing operations and through our reliance on the advisors we engaged, to maintain the highest standards for compliance with applicable securities laws,” said a company spokesperson. “We do not believe we have engaged in any wrongdoing, and if any enforcement proceeding is instituted against us by the SEC, we will vigorously defend ourselves against the action.”
The Wells notice is not a formal allegation or finding of wrongdoing by the SEC against the Legendary Capital REIT III or Maple, who will be afforded an opportunity to provide their perspective and to address the issues raised by the SEC staff before any decision is made by the SEC on whether to authorize the commencement of an enforcement proceeding.