RCS Capital Corporation (RCAP) announced this morning that broker-dealers have reinstated 51 selling agreements and resumed allowing sales of Realty Capital Securities, LLC (RC Securities) distributed products.
“We have consistently communicated to the market our belief that the suspensions of certain of our ongoing selling agreements were of a temporary nature. The reinstatement of these agreements and this initial resumption of sales are confirmation of this belief,” commented Bill Dwyer, Chief Executive Officer of Realty Capital Securities, LLC, RCAP’s wholesale broker-dealer.
Earlier in November, many independent broker-dealers (IBD) suspended sales of AR Capital and Cole Capital sponsored alternative investments due to a discovered accounting error in American Realty Capital Properties (ARCP)’s financials that was left intentionally uncorrected. ARCP is a publicly traded REIT that owns Cole Capital and has ownership ties to RCAP and AR Capital. Cole is unaffiliated with RCAP and AR Capital. RCAP’s RC Securities distributes AR Capital sponsored investments, among others, while Cole Capital sponsored investments are distributed by its own managing broker-dealer.
The fear amongst broker-dealers was that the error and cover up could be a result of a culture created within all of these entities that would allow similar behaviors to occur.
RCAP has worked to comfort IBDs over the last few weeks through private conversations and public reports. During a recent earnings call, RCAP executives explained that independent forensic accountants have reviewed its financials and found no issues or items to be changed.
“RCS Capital enjoys strong relationships with our broker-dealer network, and strongly believes firms clearly understand the value of RCS Capital-distributed products and continue to work constructively with us, just as we are eager to provide them with access to the quality products they demand,” added Dwyer.
RCAP works with over 250 firms that distribute its alternative investment solutions and has about 1,020 active selling agreements. IBD’s may have several selling agreements allowing distribution of multiple RCAP distributed products.