SEC v. Peter Stuart; and Outlier Realty Capital (27 companies), No. LR-26263, District of Maryland (Mar. 10, 2025) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26263 / March 10, 2025 Securities and Exchange Commission v. Peter Stuart, et al., No. 8:25-cv-00761 (D. Md. filed Mar. 7, 2025) SEC Charges Washington, D.C. Real Estate Developer And Twenty-Seven Companies With Negligently Misleading Investors On March 7, 2025, the Securities and Exchange Commission charged Peter Stuart and twenty-seven real estate companies he collectively operated as Outlier Realty Capital with misleading investors about how their funds would be used. The defendants have agreed to settle the charges, with Stuart and thirteen of the corporate defendants agreeing to pay a total of more than $3.3 million. According to the SEC’s complaint, Stuart and the Outlier Realty Capital defendants raised at least $34.4 million from approximately 100 investors by selling securities in companies created to invest in real estate in Washington, D.C., Maryland, or Virginia, and by representing that investor funds would be used for specific real estate projects. The complaint alleges that, in reality, the defendants commingled more than $50 million of property-specific funds, including funds from investors, and used the commingled funds for other real estate projects and to cover corporate and overhead expenses such as salaries. The complaint also alleges that when some of the properties were sold, the defendants underpaid investors by approximately $1.47 million. The SEC’s complaint, filed in the U.S. District Court for the District of Maryland, charges the defendants with violating Sections 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the allegations in the SEC’s complaint, the defendants have agreed to settle the SEC’s charges. The defendants have agreed to be permanently enjoined from violating the provisions of the federal securities laws with which they are charged and to install an independent consultant to, among other things, reconcile the defendants’ accounts and oversee the orderly sale of five properties. Stuart and thirteen of the corporate defendants have agreed to be jointly and severally liable for disgorgement of ill-gotten gains of $1,471,440 plus $159,936 in prejudgment interest. The same thirteen corporate defendants have agreed to be jointly and severally liable for a $1,471,440 civil penalty. Stuart has agreed to pay a $240,464 civil penalty, to a five-year bar from serving as an officer or director of a public company, and to a five-year injunction prohibiting him from participating in the issuance, purchase, offer, or sale of any security, except for his own account. The settlement is subject to court approval. The SEC’s investigation was conducted by Christina Adams and John Higgins and supervised by Kristen Dieter and Mark Cave. The litigation will be led by Charlie Divine and supervised by Melissa Armstrong.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26263 / March 10, 2025 Securities and Exchange Commission v. Peter Stuart, et al., No. 8:25-cv-00761 (D. Md. filed Mar. 7, 2025) SEC Charges Washington, D.C. Real Estate Developer And Twenty-Seven Companies With Negligently Misleading Investors On March 7, 2025, the Securities and Exchange Commission charged Peter Stuart and twenty-seven real estate companies he collectively operated as Outlier Realty Capital with misleading investors about how their funds would be used. The defendants have agreed to settle the charges, with Stuart and thirteen of the corporate defendants agreeing to pay a total of more than $3.3 million. According to the SEC’s complaint, Stuart and the Outlier Realty Capital defendants raised at least $34.4 million from approximately 100 investors by selling securities in companies created to invest in real estate in Washington, D.C., Maryland, or Virginia, and by representing that investor funds would be used for specific real estate projects. The complaint alleges that, in reality, the defendants commingled more than $50 million of property-specific funds, including funds from investors, and used the commingled funds for other real estate projects and to cover corporate and overhead expenses such as salaries. The complaint also alleges that when some of the properties were sold, the defendants underpaid investors by approximately $1.47 million. The SEC’s complaint, filed in the U.S. District Court for the District of Maryland, charges the defendants with violating Sections 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the allegations in the SEC’s complaint, the defendants have agreed to settle the SEC’s charges. The defendants have agreed to be permanently enjoined from violating the provisions of the federal securities laws with which they are charged and to install an independent consultant to, among other things, reconcile the defendants’ accounts and oversee the orderly sale of five properties. Stuart and thirteen of the corporate defendants have agreed to be jointly and severally liable for disgorgement of ill-gotten gains of $1,471,440 plus $159,936 in prejudgment interest. The same thirteen corporate defendants have agreed to be jointly and severally liable for a $1,471,440 civil penalty. Stuart has agreed to pay a $240,464 civil penalty, to a five-year bar from serving as an officer or director of a public company, and to a five-year injunction prohibiting him from participating in the issuance, purchase, offer, or sale of any security, except for his own account. The settlement is subject to court approval. The SEC’s investigation was conducted by Christina Adams and John Higgins and supervised by Kristen Dieter and Mark Cave. The litigation will be led by Charlie Divine and supervised by Melissa Armstrong.