The Securities and Exchange Commission has begun a formal investigation of Mills Corp. after more than two months of informally looking into accounting problems at the shopping mall real-estate investment trust.
The investigation, disclosed by the company in a filing with the SEC, gives the agency the power to subpoena company officials and documents.
In a little more than a year, the Arlington, Va.-based trust has restated its earnings twice, delayed three earnings reports, written off 10 projects and fired nearly 10 percent of its work force.
Not surprisingly, a week ago Mills announced that it wouldn't file its annual report in time to meet an SEC-imposed deadline, and that it couldn't speculate when the report would be issued. The company said that it had uncovered five new areas of accounting problems, including ones possibly having a negative impact on earnings and revenue. The company is now reviewing about a dozen aspects of its books.
Piling on the legal troubles, Massachusetts' attorney general and treasurer filed a motion this week to become the lead plaintiff in a class-action shareholder lawsuit against Mills, saying the state's pension fund had lost $5 million due to "fraudulent activity" by the company.
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