Fidelity's clearing arm restores processing some Schorsch-related nontraded REITs

Decision affects American Realty Capital brand, but not Cole
JAN 20, 2015
National Financial Services, the clearing arm of Fidelity Investments, told its broker-dealer correspondents that, effective Monday, it was facilitating new purchases for 12 nontraded REITs and business development companies under the American Realty Capital brand along with other brands distributed by Realty Capital Securities. Realty Capital Securities is the wholesaling broker-dealer controlled by RCS Capital Corp., or RCAP, the publicly traded broker-dealer holding company of which Nicholas Schorsch is executive chairman. National Financial was among a number of clearing firms that suspended processing Schorsch-related non-traded REITS after a $23 million accounting scandal at the end of October rocked American Realty Capital Properties Inc., or ARCP, another of Mr. Schorsch-controlled REIT firms. In a memo obtained by InvestmentNews, independent broker-dealer Kovack Securities informed its registered representatives and advisers this morning that National Financial had lifted the suspension of the ARC REITs, although the suspension of the Cole-branded REITS, which are more closely associated with ARCP, is still in place. There was no explanation as to why National Financial lifted the suspension in the Kovack memo. A Fidelity spokeswoman, Jessica Macdonald, confirmed the company had lifted the restriction on Realty Capital Securities products. In a statement, Andrew Backman, a spokesman for RCS Capital, said, “We are pleased that National Financial Services has resumed processing subscriptions for Realty Capital Securities public nontraded REIT and nontraded BDC programs. They are a valuable, long-term partner and we are happy to have worked with them to address their questions and requests and are pleased to see that they have resumed subscription processing for their correspondent firms.”

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