Securities America halts sales of ARC nontraded REIT

Broker-dealer moves after National Planning Holdings <a href="//www.investmentnews.com/article/20141030/FREE/141039985/national-planning-holdings-puts-kibosh-on-arc-nontraded-reit-sales&quot;" target="&quot;_blank&quot;" rel="noopener noreferrer">puts kibosh on ARC nontraded REIT sales</a> in wake of $23 million <a href="//www.investmentnews.com/article/20141029/FREE/141029902/schorschs-empire-jolted-by-23m-accounting-mishap&quot;" target="&quot;_blank&quot;" rel="noopener noreferrer">accounting mishap</a> at Nick Schorsch's ARCP.
OCT 10, 2014
Securities America Inc., with 1,772 registered reps and advisers, confirmed Friday it had temporarily suspended sales of two American Realty Capital-related REITs: the Phillips Edison-ARC Grocery Center REIT II and Cole Capital Properties V, one day after another large independent broker-dealer made a similar move. The two sales actions come as Nicholas Schorsch, ARC's chairman, faces withering scrutiny after news broke Wednesday that the traded REIT he controls, American Realty Capital Properties Inc., had made a $23 million accounting error that resulted in the firing of its chief financial officer. “Securities America temporarily suspended all sales in [the two REITs] until our due-diligence team has time to review potential implications of the recent news regarding American Realty Capital Partners,” Janine Wertheim, the firm's chief marketing officer, wrote in an email. Meanwhile, Reuters reported Friday that the FBI, along with prosecutors from U.S. Attorney Preet Bharara's office in Manhattan, is conducting an investigation into American Realty Capital Properties, which is known by its ticker symbol ARCP. Bonnie Rosen, a spokeswoman for ARCP, did not return a call and email late Friday seeking comment. Tony Defazio, a spokesman for ARC, did not comment about Securities America. On Thursday, the four broker-dealers in the National Planning Holdings Inc. broker-dealer network informed their 3,954 registered reps and advisers that it was “temporarily suspending nontraded REITs sponsored or distributed by [American Realty Capital] and its affiliated companies.” Those four firms are: Invest Financial Corp.; Investment Centers of America Inc.; National Planning Corp.; and SII Investments Inc. That suspension affected one ARC-related REIT, the Phillips Edison Shopping Center REIT II.

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