December 3, 2015
RCS Capital Corp. (RCAP) was trading at over $38 in April 2014. At the time of this writing it is trading for 43 cents. Investors who have suffered losses on RCAP may be able to recover damages from the brokerage firm that recommended the investment if it can be shown that the recommendation was not suitable.
How did the value of this once high flying company drop so dramatically?
Last month , RCS Capital, founded by real estate mogul Nicholas Schorsch, settled charges with Massachusetts securities regulators who had charged the company with fraudulently obtaining proxy votes to support real estate deals sponsored by AR Capital, a related company. RCAP agreed to pay $3 million to settle the charges.
This week RCS Capital announced that they would shut down its wholesale brokerage division Realty Capital Securities due to declining sales of nontraded real estate investment trusts (REITs). This move will result in the layoff of around 200 people, according to recent press.
RCS Capital was on an acquisition binge over the past couple of years acquiring a string of independent broker dealers. At the time Schorsch was criticized for overpaying for these small brokerage firms and after third quarter reporting results, it appears the criticism was warranted, based upon the massive write-offs taken:
- Cetera Financial Holdings-purchased in 2014 for $1.15 billion, written down by $134 million.
- Summit Financial Services Group= purchased in 2014 for $57.2 million, written down by nearly $10 million.
- First Allied Holdings purchased in 2014 for $177 million, written down by nearly $45 million.
- Investors Capital Holdings purchased in 2014 for $52.5 million, written down by $26.7 million.
- VSR Group, purchased in 2015 for $66.7 million, written down by $28 million.
- Girard Securities purchased in 2015 for $27.8 million, written down by $13.2 million.
- J.P. Turner purchased in 2014 for $32.7 million was written down by over $13 million earlier this year.
RCAP took additional write-offs on other business units totaling tens of millions of dollars as well.
If you suffered losses on RCAP that you purchased based on the recommendation of your broker you may be able to recover damages from the broker dealer where the broker worked at the time. Call to discuss your legal options.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
Florida-561 391 1900