RCS Capital Threatened with Delisting from the NYSE
RCS Capital (NYSE: RCAP), the embattled brokerage firm founded by real estate mogul Nicholas Schorsch, received a delisting notice from New York Stock Exchange on Tuesday indicating that its Class A common stock did not satisfy the NYSE standards for continued listing.
The NYSE requires that a listed company maintain an average closing price per share of more than $1.00 for a consecutive 30-trading-day period. During the previous 30-day trading period, RCAP stock fell below this $1.00 threshold requirement. At press time, RCAP shares were trading at $0.45 each.
Under the NYSE rules, RCS Capital has six months following receipt of the notification to bring its average share price back to $1.00 per share. The company’s common stock will continue to be listed and traded on the stock exchange during this period.
RCS Capital said in a press release issued on Thursday that “the company intends to notify the NYSE that it anticipates that this deficiency will be cured and that it will return to compliance with the NYSE continued listing standard, and the NYSE has agreed to work with the company through its initiatives.”
The delisting notification was issued on the heels of a complaint against the firm by the state of Massachusetts for allegedly fabricating shareholder proxy votes. According to the complaint filed on Thursday, Massachusetts Secretary of the Commonwealth William Galvin seeks to revoke RCS’s broker-dealer registration in the state for alleged fraudulent actions, including fabricating shareholder votes by having RCS employees masquerade as shareholders to cast proxy votes in favor of investment programs sponsored by AR Capital. Galvin is also seeking to impose an administrative fine on the company.
Earlier this week, Apollo Global Management LLC (NYSE: APO) and Schorsch’s AR Capital terminated a previously reported deal in which Apollo was to purchase a 60 percent majority interest for $378 million in AR Global Investments, a new company that would own the asset management business of AR Capital. AR Capital manages approximately $19 billion of alternative assets across a variety of real estate investment trusts, business development companies, mutual funds and other partnerships. Schorsch would have served on the board of directors and as a senior managing director of the new company. The deal would have also provided an opportunity for Schorsch and other senior ARC executives to earn up to $900 million in other compensation.
In addition, Apollo was expected to acquire RCS Capital’s wholesale distribution business for $25 million in cash, which would have become part of AR Global Investments. Under an amended agreement, RCS Capital agreed to sell its wholesale distribution business, including Realty Capital Securities and Strategic Capital, to Apollo for $6 million in cash – far less than the original asking price.
