SEC Investigation into Paramount Group Heats Up

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The Securities and Exchange Commission is ramping up its investigation into the past dealings of the now-defunct Paramount Group, months after the firm was sold to Rithm Capital, sources told The Real Deal.

Paramount Group, a major office landlord in New York and San Francisco, revealed last summer it was under an SEC investigation for its disclosures around the use of corporate assets, executive compensation, related-party transactions and conflicts of interest.

At the time, the company had disclosed it had made millions of dollars in payments to its long-time CEO Albert Behler in previously undisclosed compensation. These payments included more than $3 million to a private jet company in which Behler owned a 50 percent stake.

Now, over a year later and after being acquired, the SEC has subpoenaed at least one former Paramount executive, according to sources familiar with the matter. Another former board member had conversations with the SEC as well, per sources. The exact nature of those conversations is unclear. The SEC declined to comment.

In its filing last year, Paramount said the investigation also covers its possible “failures of controls and procedures” related to its disclosures. The firm said it was cooperating with the SEC.

The status of the SEC investigation remained a mystery after Rithm Group acquired Paramount Group in a $1.6 billion deal in December. Paramount no longer had to file quarterly filings with the SEC. Rithm declined to comment.

When the deal closed, Rithm fired Behler in a somewhat dramatic fashion; He was escorted out of Paramount’s offices, according to multiple sources, ending his more than three-decade tenure as the office landlord. (A source close to Behler previously disputed this account of events.)

Since then, Rithm has put Paramount’s prized office asset, the 45-story 1301 Sixth Avenue, on the market.

But Albert Behler’s reign at Paramount and concerns about the firm’s corporate governance continue to haunt Paramount’s long-standing board members.

An activist investor in cold-storage firm Americold is seeking to remove Mark Patterson, the chairman of the board, for bringing poor governance practices to the company. The activist investor, Sieve Capital, cited The Real Deal’s reporting about loans Behler provided to a robotic garage company led by Patterson in late 2014. It was unclear whether the loans were ever paid back. In 2018, Patterson joined Paramount’s board. At one point, he chaired Paramount’s nominating and corporate governance committee.

Behler could not be reached for comment.