Larry Roth's doing a lot more than selling nontraded REITs

There's hard evidence that he has been the architect behind Nick Schorsch's growing broker-dealer empire

Apr 22, 2014 @ 11:59 am

By Bruce Kelly

Larry Roth surprised some people last summer when he jumped ship as chief executive of leading independent broker-dealer network Advisor Group to become chief executive at Realty Capital Securities.

The move struck some as odd, because Realty Capital is the wholesaling broker-dealer for nontraded real estate investment trusts sponsored by American Realty Capital. Advisor Group, owned by American International Group Inc., is a broker-dealer network of four firms and 6,135 reps and advisers — a markedly different business.

At the time, Nicholas Schorsch, CEO of ARC, said that Mr. Roth would be at the forefront of distributing products, from mutual funds to nontraded REITs, with an emphasis on wirehouses. The potential for Realty Capital's and ARC's new relationships with wirehouses is “a huge area for Larry,” Mr. Schorsch said.

(See also: Brash REIT boss hires his opposite)

A number of people in the industry doubted his pronouncements. Mr. Roth is a known dealmaker, having spent 2001 to 2005 at Berkshire Capital, a top mergers and acquisition investment bank that focuses on financial services firms and independent broker-dealers.

Such prowess looked to be a perfect fit for Realty Capital. Its parent, RCS Capital Corp., has been on a buying spree, with RCS Capital or related entities completing one broker-dealer acquisition and announcing four others since last June. The transactions affect almost 9,000 reps and advisers.

(More: No end in sight for Schorsch tear)

Why would Mr. Schorsch hire Mr. Roth and ignore his M&A expertise, particularly as Mr. Schorsch and RCS Capital were assembling a top-tier IBD network? That was a prevalent industry question when Mr. Roth joined Realty Capital last September.

Well, it looks as though Mr. Roth has been doing a lot more than wholesaling alternative mutual funds and nontraded REITs in the past several months. In fact, he was sitting at Mr. Schorsch's side, at least through the initial discussions of RCS Capital's most significant deal to date, the pending $1.15 billion purchase of Cetera Financial Group from private equity manager Lightyear Capital.

According to RCS Capital's proxy filing with the Securities and Exchange Commission on April 8, Mr. Roth and Mr. Schorsch met Donald Marron, chairman of the Cetera board and Lightyear's founder, on Nov. 23 in Lightyear's New York offices. The purpose of the meeting, which involved a smattering of other Lightyear and Realty Capital executives, was “to discuss a potential strategic transaction between [RCS Capital] and Cetera,” the filing states. The deal progressed rapidly and was announced in January.

RCAP spokesman Tony DeFazio declined to comment for this story.

Meanwhile, the industry is waiting for Mr. Schorsch's next acquisition. RCS Capital indicated such a move in March, saying it had another potential broker-dealer acquisition teed up but was waiting for the Cetera purchase to close.

Will Mr. Roth be sitting next to Mr. Schorsch when that deal is done? Will he help engineer a bid for another large broker-dealer network that he knows well?

Don't be surprised if he does.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

The need for easier investment options.

Rob Barnett of Wilmington Trust makes the case for simpler investment choices for plan participants and sponsors.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print