CBL & Associates Properties, Inc. (CBL) Accused Of Hiding Millions in Lawsuit Liability for Years

According to the complaint for alleged violations of the Securities Exchange Act of 1934 between November 8, 2017 through March 26, 2019, since 2016, CBL & Associates Properties, Inc. (CBL) failed to disclose the existence of a class action lawsuit that could result in hundreds of millions of dollars in liability. Although CBL defended itself against the lawsuit for years, it turned out to have no true defense. In 2019, CBL was forced to settle the case by paying almost $90 million. No insurance covered these sums, as CBL’s insurer had disclaimed coverage. To make the situation worse, CBL embarked on a fraudulent scheme whereby it issued SEC reports that simply pretended that it faced no material litigation at all. No reserve was taken in the financial statements to account for any estimated payment. In March 2019, CBL belatedly revealed the class action suit, but left out key facts and falsely claimed an inability even to estimate potential exposure. It was blatantly misleading as a loss was probable and an accrual was required to be taken under applicable accounting rules. This partial revelation resulted in CBL's stock dropping almost 8%. Once news of the settlement amount was revealed, CBL shares dropped 47 cents, or roughly 25%.