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$50 Million Budget for Cetera Retention in RCAP Bankruptcy

RCS Capital (NYSE:RCAP) has allocated $50 million for retention bonuses for Cetera-affiliated financial advisors – currently 9,000 strong, according to a bankruptcy court filing. The firm did not give any specifics as to how the bonuses would be distributed or if there are eligibility requirements currently in place.

In the filing, the firm only indicated that the $50 million will fund “a critically needed retention program for the independent financial advisors, which is crucial to mitigating retention risk.”

The company, which listed assets of $1.98 billion and debts of $1.39 billion, previously announced that key lenders will invest $150 million into Cetera as part of the balance sheet restructuring.

RCS Capital filed for Chapter 11 bankruptcy on Sunday as part of its strategy to transform Cetera, one of the nation’s largest networks of independent broker-dealer firms, into a private retail business. The process is expected to conclude in May 2016.

Larry Roth, chief executive officer of Cetera Financial Group, commented, “The actions we have taken over the past several months, while difficult, are aligned with our goal to transform Cetera into the retail advisory platform of the future. The underlying value proposition of Cetera remains intact, as does the reason why advisors have joined, and stayed on, our platform. As evidenced by Cetera’s strong retention rates, the level of institutional knowledge and management stability demonstrated by our financial advisors over the years clearly stands out in our industry.”

Cetera is the second largest independent financial advisor network in the nation with 9,500 independent financial professionals and more than 500 financial institutions nationwide.

The network is comprised of ten firms – four legacy Cetera-branded firms (Cetera Advisors, Cetera Advisor Networks, Cetera Investment Services, marketed as Cetera Financial Institutions, and Cetera Financial Specialists) along with First Allied Securities, Investors Capital Corporation, Legend Equities Corporation, Summit Brokerage, VSR Financial Services and Girard Securities.

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