Cetera suspends sales of AR Capital REITs

Cetera suspends sales of AR Capital REITs
Broker-dealer takes action after Massachusetts' securities regulator charged a related company with fraudulently rounding up proxy votes to support real estate deals sponsored by AR Capital.
NOV 09, 2015
Cetera Financial Group, the retail brokerage network owned by RCS Capital Corp., has halted sales of ARC- branded real estate investment trusts and other alternative investments. According to a source with first-hand knowledge of the decision, all 10 Cetera broker-dealers, not just the four that carry the Cetera name, on Friday suspended until “further review” the sale of all AR Capital products. AR Capital products are distributed by Realty Capital Securities, or RCS, a wholesaling broker-dealer that is also owned by RCS Capital Corp., or RCAP. Cetera's halt in sales came a day after the state of Massachusetts charged RCS with fraudulently rounding up proxy votes to support real estate deals sponsored by AR Capital, which is owned by Mr. Schorsch and William Kahane. Mr. Schorsch is also a principal shareholder in RCAP. (More: Read how Nick Schorsch lost his mojo)​ In an administrative complaint, Massachusetts Secretary of the Commonwealth William Galvin said agents of RCS impersonated shareholders and cast fake votes for investment programs sponsored by AR Capital. Executives at other independent broker-dealers said on Sunday that major clearing firms and other broker-dealers could possibly suspend sales of AR Capital products later this week in the wake of the fraud charges against RCS. Joseph Kuo, a spokesman for Cetera Financial Group, neither confirmed nor denied Cetera's suspension of AR Capital products. “We conduct ongoing due diligence of all products,” Mr. Kuo wrote in an email to InvestmentNews. “As a matter of policy, we do not publicly discuss specific products and specific product companies." Andrew Backman, a spokesman for AR Capital and Realty Capital Securities, did not return a call Sunday evening to comment. RCAP is expected to release its earnings on Monday.

Latest News

Texas man says SEC and fund could make him pay twice
Texas man says SEC and fund could make him pay twice

A $141M judgment and a federal asset freeze collide over one shrinking pool

Osaic executives Kristy Britt and Greg Cornick to leave
Osaic executives Kristy Britt and Greg Cornick to leave

The firm's CFO and EVP of Wealth Management Solutions are the latest executives to exit the broker-dealer.

Estate planning becomes a client retention issue for financial advisors, survey finds
Estate planning becomes a client retention issue for financial advisors, survey finds

Clients are saying they would consider switching advisors if another professional offered estate planning services, according to a new Trust & Will survey.

Candidly adds AI agents for Trump Accounts, workplace benefits
Candidly adds AI agents for Trump Accounts, workplace benefits

CEO Laurel Taylor says the fintech's composable AI stack helps workers optimize dollars across Trump Accounts, 529s, 401(k)s, and other employee benefits.

BMO adds three advisors in Dallas amid Y'all Street wealth boom
BMO adds three advisors in Dallas amid Y'all Street wealth boom

The bank has swiped three private banking veterans from BNY as the city climbs the ranks of America's fastest-growing wealth hubs.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.