Federal regulators are turning up the pressure on Paramount Group, the office landlord behind a clutch of Class A towers in Manhattan and San Francisco, after the Securities and Exchange Commission subpoenaed at least one former executive and interviewed a former board member. The scrutiny follows the company’s disclosure last summer that the SEC was reviewing its disclosures about executive pay, use of corporate assets and related-party transactions. At the center of it all: millions in previously undisclosed payments tied to former CEO Albert Behler and the question of exactly what Rithm Capital walked into when it closed a $1.6 billion takeover late last year.
According to The Real Deal, the SEC has subpoenaed at least one former Paramount executive and has spoken with a former board member as part of its probe into disclosures related to corporate assets, compensation and potential conflicts of interest. The outlet reports that investigators have asked about previously undisclosed payments and related-party arrangements. The SEC, true to form, declined to comment.
How the Probe Began
Paramount itself revealed in public filings that the SEC’s Division of Enforcement was reviewing the adequacy of its disclosures, according to a Form 10-Q filed with the SEC. That filing and subsequent reporting showed the company had made millions of dollars in payments to businesses tied to Behler, including more than $3 million to a jet-charter firm in which he held a stake and roughly $900,000 for personal accounting services. Those details set off investor anger and raised fresh governance questions, according to Commercial Observer. In its public statements, Paramount told investors it was cooperating with regulators.
Deal and Fallout
Rithm Capital completed its roughly $1.6 billion acquisition of Paramount late last year, a milestone the buyer announced as the deal closed. In the weeks after the sale, the new owner replaced management and, according to reporting, former CEO Albert Behler was escorted from the company’s offices. Rithm has also moved to market the 45-story tower at 1301 Avenue of the Americas. Rithm Capital confirmed the closing of the deal but declined to comment on the status of the regulatory review.
Legal Stakes
Subpoenas often precede potential enforcement actions, and shareholder attorneys are already circling. A PR Newswire investor-action notice cites a law firm investigating claims after press coverage of the payments tied to Behler. PR Newswire notes that media reporting helped ignite investor scrutiny. In cases like this, regulators typically seek documents and witness testimony, and beyond these subpoenas, the trajectory will depend on what investigators uncover and whether they allege civil or criminal violations.
Why This Matters for Midtown and Beyond
Paramount’s portfolio included some marquee Manhattan addresses, notably Paramount Plaza at 1633 Broadway and 1301 Avenue of the Americas, and the SEC’s deepening interest adds friction to Rithm’s effort to reposition those assets. Shareholders approved the sale last December while governance questions still hung over the company, according to Commercial Observer, and the company’s SEC filings list the New York and San Francisco properties that Rithm now manages. For tenants, brokers and would-be buyers, the probe introduces another layer of uncertainty that could slow marketing and sales timelines while regulators and plaintiffs’ lawyers press for answers.
