AIG Advisor Group, Securities America, LPL Financial, Cambridge, And Even Schorsch’s Broker-Dealer Stops Selling His REITs
More broker-dealers are suspending their sale of Nicholas Schorsch-affiliated nontraded real estate investment trusts. The suspensions are coming in the wake of the announcement of a $23 million accounting error involving American Reality Capital Properties Inc., which is the traded REIT under Schorsch’s control. Even after the error was found it was purportedly purposely left unfixed.
Now, LPL Financial Holdings Inc. (LPLA), the biggest independent broker-dealer in the country, has said that it has put a stop for now to the sale of products sponsored Schorsch’s RCS Capital Corporations, American Realty Capital Properties Inc., and their affiliates. LPL has almost 14,000 advisers.
Another brokerage network, AIG Advisor Group, which has four broker dealers and 6,000 registered representatives and advisers, said it was suspending its sale of two Schorsch-related nontraded REITS: the Phillips Edison-ARC Grocery Center REIT II and the American Realty Capital New York City REIT Inc.
Securities America also said that it was temporarily suspending sales of the Cole Capital Properties V. and the Phillips Edison-ARC Grocery Center REIT II, which are both American Realty Capital-related REITs. On Wednesday, Cambridge Investment Research Inc. notified its over 3,041 registered representatives and advisors to stop, at least for now, selling three Cole-branded products. The following day it announced the suspension of sales in four Realty Capital Securities-distributed products.
Last week, it was National Planning Holdings Inc.’s four broker-dealers that told their nearly 4,000 registered reps and advisers to temporarily suspend the sale of nontraded REITs that American Reality Capital and its affiliate company's sponsor. As if matters couldn’t get worse for Schorsch, his own broker-dealer network, Cetera Financial Group, also suspended the sales of nontraded REITs related to the Cole brand. Cetera is a RSCS Capital Corp, also known as RCAP, subsidiary. Schorsch is executive chairman of RCAP.
On Friday, InvestmentNews reported that Massachusetts regulator William Galvin is now investigating Realty Capital Securities. His office is examining how the broker-dealer sold the nontraded REITs under scrutiny, including what information was provided to the REIT investors. Realty Capital Securities is based in Boston.
Also, Schorsch’s own American Realty Capital appears to be also trying to create some distance from the accounting debacle. Several of its nontraded REITs have updated their filings with the SEC emphasizing that they are separate from ARCP. Not only is ARCP a separate company but also that it is not affiliated with ARC. Schorsch’s RCAP also is distancing itself from ARCP, maintaining the two of them separate from one another.
If you suspect that your investment losses are due to REIT fraud, please contact our securities fraud law firm today. Shepherd Smith Edwards and Kantas LLP helps investors get their money back.
LPL, Advisor Group Stop Sales of American Realty Capital REITs, Think Advisor, November 4, 2014
Massachusetts regulator Galvin investigating Schorsch B-D, Investment News, November 7, 2014
More Blog Posts:
National Planning Holding Temporarily Stops Selling American Reality Capital Properties’ Nontraded REIT sales After Disclosure of $23M Accounting Error, Institutional Investor Securities Blog, October 31, 2014
SEC Approves Regulations Involving REIT Prices and Arbitration Fraud Intervention, Stockbroker Fraud Blog, October 18, 2014
California Regulators Probe Inland American Real Estate Trust REIT, Stockbroker Fraud Blog, May 15, 2014