Whitestone REIT (WSR) Accused of Misleading Investors

According to the complaint against Whitestone REIT (NYSE: WSR) for alleged violations of the Securities Exchange Act of 1934 between May 9, 2018 and February 27, 2019, Whitestone stated that its internal control over financial reporting was effective and attested to the accuracy of the financial statements, effectiveness of internal controls, and that all fraud was disclosed. The truth was revealed on February 27, 2019, after the market closed, when Whitestone disclosed that its 2018 financial results for the periods ending March 31, June 30, and September 30 could no longer be relied upon and would be restated. Specifically, Whitestone cited certain accounting errors relating to nonfinancial assets. On this news, over the course of two trading days, Whitestone’s price per common share of beneficial interest declined from a close of $14.25 on February 27, 2019, to a close of $13.01 on February 28, 2019. The next day, the stock continued to plummet, to close at $12.18 on March 1, 2019, an overall drop of approximately 14.52 percent.