Former Realty Capital Securities Employees Banned by FINRA
FINRA barred a former Realty Capital Securities rep and wholesaler in a ruling on Monday related to a scheme involving impersonating shareholders for proxy voting in favor of management proposals favorable to AR Capital, the non-traded REIT sponsor led by Nicholas Schorsch.
RCS Capital Corporation was the brokerage firm founded by Schorsch to distribute AR Capital-sponsored non-traded investment offerings that shut down in December 2015 following the exposure of the fraudulent proxy voting scheme. RCS reached a settlement with the state of Massachusetts that same month in response to the fraud charges for $3 million.
William Galvin, the Massachusetts Secretary of the Commonwealth, charged that members of RCS had cast phony proxy votes while impersonating shareholders and that RCS executive management had put extreme pressure on the RCS sales force to illicit votes favored by the shared executive teams of RCS and ARC.
Eric S. Ovesen, a rep, worked in the firm’s Boston office from November 2013 until November 2015. Christopher Michael Tenaglia, an internal wholesaler, worked in the firm’s Boston office, from August 2010 until October 2015.
Both Tenaglia and Oversen failed to provide on-the-record testimony as requested by FINRA in October 2017. Each signed FINRA’s Letter of Acceptance, Waiver and Consent without admitting or denying the assertions.
Conor Hobert, another former RCS employee, was suspended for two years by FINRA for participating in the proxy fraud by impersonating multiple investors to vote their shares without their consent. Hobert’s actions were at the direction of his supervisor, according to FINRA.
