There has been much buzz throughout the Direct Investment Industry regarding Nicholas Schorsch and his empire of entities. Just recently, Mr. Schorsch strayed from his broker dealer buying addiction and worked a deal with Todd Snyder and John Kearney, better known as Snyder Kearney, LLC (Snyder Kearney), a law firm that has provided third party due diligence of sponsors and their offerings for years to the independent broker dealer community.
As reported by The DI Wire several weeks ago, Snyder Kearney, LLC will cease operations and most of the firm’s personnel will make the move to be part of SK Research, a new business unit under RCS Capital Corporation (RCAP).
After consulting with several broker dealer due diligence contacts, national accounts managers, and others in the industry, it was clear to The DI Wire that there were varying opinions on what to expect from SK Research (SK).
In order to provide clarity, we spoke directly with Mr. Schorsch.
Here are the details:
In short, SK will provide third party due diligence, research and data, opinions, and education for broker dealers and financial advisors.
“They are not going to be taking over our due diligence groups,” commented Schorsch referring to the due diligence personnel within his broker dealer network’s separate firms.
SK will continue to provide third party due diligence of sponsors and offerings just as they (Snyder Kearney) have always done, providing reports to broker dealers outside of the RCAP network, as well as those in it.
In order to provide a complete due diligence report including a legal review, SK Research has formed a joint venture with Hogan Lovells, a NY based law firm.
SK will continue to supply the quarterly REIT reports just as the former Snyder Kearney had done and will also offer a frequent communication covering important industry topics.
They will also provide research, data, and opinions on non-traded and traded investments with the goal of assisting broker dealers and advisors discern which the most appropriate choice is for investors. Schorsch compared this function of SK Research to Green Street Advisors, a provider of research on REITs.
Lastly, SK will provide opinions on sector performance, investment type, and market segments.
“Which type of oil and gas do you want to be in? What form do you want to be in? Do you want to do it in an MLP?” offered Schorsch.
He added that advisors need answers to these questions and a reliable source to provide them.
Mr. Schorsch believes the industry continues to grow and benefit from increased transparency, lower fees, best practices, and FINRA and the SEC’s work to improve the industry for the benefit of investors.
He added that in the past offerings would raise capital for an average of four years, but today, it takes 12 to 18 months to reach goal.
With this increased volume, broker dealers will need to adapt. Schorsch thinks that it would be too costly to increase staff at many of the smaller and midsized broker dealers, but utilizing the services of SK Research will provide all the support a BD needs when it comes to initial and on-going due diligence and educational support.
Concerns of a conflict of Interest
Schorsch maintains that SK Research is an independent and completely separate business unit in its own location. Actually, SK Research is located in the same facility Snyder Kearney LLC called home. He also added that no one from the parent company will be located in the building and that the data and information SK works from is their own.
“It’s a truly independent organization no different than the research unit at Morgan Stanley or anywhere else,” says Schorsch.