Embattled Paramount Group revealed the company is under an investigation by the Securities and Exchange Commission, months after telling shareholders it made millions of dollars in previously undisclosed payments to its CEO’s companies.
The publicly traded company said the SEC is investigating the firm’s disclosures related to executive compensation, perks, corporate asset use, related party transactions and conflicts of interest. The investigation will also look at controls and procedures related to those disclosures.
Paramount, a large office owner in New York City and San Francisco, disclosed the existence of the investigation in a filing with the SEC announcing its second-quarter earnings on July 30. Paramount said in the filing that it is cooperating with the SEC.
The investigation occurs as Paramount is under intense scrutiny from shareholders. It is also considering a possible sale of the company and has hired Bank of America as its financial advisor.
An inquiry by the SEC is not much of a surprise. Earlier this year, Paramount revealed it paid millions of dollars to companies controlled by its CEO, Albert Behler.
The payments to Behler’s outside companies were previously undisclosed to public shareholders and were only revealed by Paramount this year. The expenditures included over $3 million to a private jet company in which Behler owns a 50 percent stake. Paramount also spent over $900,000 on Behler’s personal accounting services between 2022 and 2024.
In addition, Paramount paid over $200,000 for a company controlled Behler’s wife to design a lounge at Paramount’s 1301 Sixth Avenue office building. In February, the firm inked another $225,000 contract with Behler’s wife’s design firm.
Paramount also spent $12,000 for wine from Behler’s German vineyard, while Behler racked up $77,000 more than the company’s allotment for club memberships.
Public companies are required to report related party transactions over $120,000 under SEC rules.
Behler’s undisclosed payments were tacked on to his impressive compensation package of $20.2 million in 2023.
After news broke about the undisclosed payments, Paramount announced a major shakeup in leadership. Wilbur Paes, the firm’s chief operating officer, chief financial officer and treasurer, and Gage Johnson, Paramount’s general counsel, are leaving the company. Board member Katharina Otto-Bernstein and daughter of Paramount founder Werner Otto, has also left.
Paramount parted with its outside legal counsel Goodwin Procter, according to the Wall Street Journal.
The company said it is undergoing a review of strategic alternatives, which could include a sale.
Paramount previously rejected two bids to sell the company in 2020 and 2022 for as high as $12 per share. Paramount’s stock is trading much lower, at $6.28 by end of day Monday.
During its second-quarter earnings call, only one analyst asked about the SEC investigation.
Behler said the investigation was related to certain “historical disclosures.” He said he did not expect it to have any “significant impact at all to the strategic review.”
But the investigation has already cost the firm in legal fees.
Paramount disclosed in its SEC filing that it has reached an indemnification agreement with Wilbur Paes, the former COO, CFO and treasurer, to reimburse Paes for certain costs incurred by the investigation. These costs included fees paid to Paes’s lawyer totaling $274,000 during the first half of 2025.
In the SEC filing, Paramount said it is “unable to estimate the likely outcome of this matter, or a reasonably probable range of potential costs or exposure, or the potential duration of the process, at this time.”
In a statement, the firm did not address the investigation or the payments to Paes. Instead, a spokesperson said, “following a successful first two quarters marked by strong leasing activity, we remain focused on our strategic review in order to maximize shareholder value.”
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