Nick Schorsch founder of RCS Capital

Nick Schorsch, founder of RCS Capital

RCAP Appoints New General Counsel

RCS Capital (RCAP) has appointed Mason Allen as its new general counsel, taking over for James Tanaka immediately.

In a statement, the firm did not say why Tanaka left the position, although the firm said there were no disagreements between Tanaka and RCAP. His LinkedIn page says he’s serving as chief securities counsel and executive vice president at American Realty Capital.

Most recently, Allen was serving as assistant general counsel at RCAP. Before joining RCAP in 2013, he was a practicing capital markets and finance attorney with Proskauer Rose LLP, representing domestic and foreign private issuers, initial purchasers, underwriters, dealer managers and placement agents in capital markets, leveraged finance and other corporate transactions.

RCAP, the parent company of retail advice unit Cetera Financial Group, has been mired in turbulence since October 2014, when a formerly related company announced a $23 million accounting error. Earlier this month, a unit of the company, Realty Capital Securities, was charged by Massachusetts' top securities regulator with fraudulently casting shareholder proxy votes.

RCAP’s CEO Michael Weil recently stepped down from his position, after about a year on the job. Larry Roth, head of Cetera, has replaced him.

RCAP has been cash-strapped lately. Private equity asset manager Apollo Global Management had planned to buy the firm’s wholesale broker/dealer business for $25 million, but later reduced the price to $6 million in cash. Apollo also called off the deal to purchase the asset management business of AR Capital. Instead, AR Capital is purchasing $25 million of RCAP preferred stock from Apollo for $25.6 million. 

RCAP recently outlined plans to raise capital, including selling Hatteras, its liquid alternatives investment management platform, to the Hatteras Funds management group for $5.5 million and certain earn-out obligations. RCAP purchased Hatteras in the fall of 2013, under Nicholas Schorsch, former head of RCAP.

The firm is also working with Lazard Freres & Co. to explore “options to raise significant capital and to rationalize the company’s capital structure,” RCAP said in a statement. The board of directors “will negotiate and approve any proposals derived from the process led by Lazard.”

The firm also issued $27 million of new senior unsecured promissory notes--$12 million to RCAP Holdings, which also owns AR Capital, and $15 million to Luxor Capital Group, of which owns a stake.

RCAP also agreed with its lenders to change its credit facilities, including the incurrence of the notes.

The company’s shares are down 96 percent this year. Earlier this month, the New York Stock Exchange said it would delist RCS Capital common stock if the firm doesn't get its stock price above $1 a share in the next six months.

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