RCS Capital Corp. (RCAP) said some brokers have lifted suspensions on investment products it sells following accounting errors at American Realty Capital Properties Inc.
"We anticipate most of the suspended RCS products will be reinstated by the year end," Chief Executive Officer Michael Weil said on the company's earnings conference call today. "Several broker dealers have already lifted suspensions that have been put in place."
RCS shares have fallen more than 40 percent since the accounting mistakes were disclosed two weeks ago, partly because of concern of damage to its business selling nontraded real estate investment trusts sponsored by AR Capital LLC. That company was created by Nicholas Schorsch, RCS's chairman and biggest shareholder, and chairman of American Realty (ARCP) Capital as well. Brokerage firms including LPL Financial Holdings Inc. have said they were suspending sales of some products tied to the New York-based companies.
RCS fell 1.4 percent to $11.43 at 3:18 p.m. New York time, paring a loss of as much as 23 percent after its earnings trailed analyst estimates.
RCS, which has sought to distance itself from American Realty Capital, said today the board's audit committee and management team are confident in its reported financial results after a review by an independent external counsel and forensic accounting firm.
Merger Lawsuit
RCS last week ended a deal with the REIT to buy Cole Capital, a private-capital management business. American Realty, the biggest U.S. owner of single-tenant buildings, sued RCS on Nov. 11 over the termination.
