The Dallas Morning News turned to partner Jim Lundy for insight on a recent Securities and Exchange Commission (SEC) investigation involving Monty Bennett, the owner of three Dallas-based hotel companies, and related-party transactions.
The publication reports that the SEC investigation comes after the hotels returned at least $69 million in COVID-19 relief funds received under the Paycheck Protection Program.
In a regulatory filing on August 3, Bennett revealed that his trio of publicly traded companies, including Ashford Inc., Ashford Hospitality Trust, and Braemar Hotels and Resorts, received a subpoena in June to produce documents starting from Jan. 1, 2018. The requested documents covered the companies’ accounting practices and controls.
Lundy told the publication that there’s nothing inherently wrong with related-party transactions. Instead, he said, it’s how those transactions are disclosed and handled from an accounting perspective.
“Related-business transactions receive more scrutiny because there’s the conflict-of-interest concern,” he said. “They’re concerned transactions will lead to benefits for the parties involved at the detriment of shareholders or investors.”