CBL & Associates Target of FBI, SEC Fraud Probes

The stock price of CBL & Associates Properties Inc. sank 13% in early trading after a published report said the U.S. retail landlord is being investigated for accounting fraud.

Shares of the Chattanooga, Ten.-based real estate investment trust dropped to $8.89 at 8:06 a.m. on Wednesday morning from $10.26 at Tuesday's close, after the Wall Street Journal reported that the FBI and the Securities Exchange Commission are probing whether the firm falsified information on financial statements to banks when applying for financing.

Law-enforcement officials have talked to former CBL employees who allege the company inflated rental income and occupancy rates for its properties when providing those figures to banks, the newspaper said, citing people familiar with the matter.

CBL released a statement Wednesday saying the "serious allegations" made in the newspaper report are gufalse and that none of the company's executives have been contacted by the FBI, the SEC or any other regulatory agency.

"We believe these allegations to be completely baseless and take very seriously any questions regarding our accounting and financial practices," the company said in the statement. "We strongly deny and will seek to understand the origin of these allegations."

Federal investigators are separately asking about the relationship between the company and U.S. Sen. Bob Corker of Tennessee, the Journal reported. Corker, who has friendly ties to CBL's senior executives, has made millions of dollars in profits trading the company's stock in recent years, the newspaper reported.

The report said investigators haven't found evidence of wrongdoing by Corker, and a spokeswoman for the senator told the Journal that the allegations against him are "baseless." A voicemail left at the senator's Washington DC office before regular business hours wasn't immediately returned.

CBL owns and develops malls and shopping centers. It owns, holds interest in or manages 145 properties -- with a combined 84.9 million square feet -- across 31 states, according to the statement.

"At all times, our company operates with the utmost integrity and holds itself to the highest ethical standards," CBL said in the statement. "We have stringent policies and procedures in place to ensure all of our accounting and financial processes and reporting comply with applicable laws, rules and regulations."

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