RCAP Recoups 51 Selling Agreements; LPL, AIG Hold Out

RCAP Recoups 51 Selling Agreements; LPL, AIG Hold Out

Over 50 broker/dealers have agreed to resume selling products distributed by RCS Capital (RCAP), the firm said Monday. But heavyweight broker/dealers AIG Advisor Group and LPL Financial have not yet to jump back into the fray.

RCAP has been in the headlines since sister company American Realty Capital Properties recently reported making $23 million in accounting errors. Of the 31 investment products that RCAP distributes through its wholesale broker/dealer, 14 of them are affiliated with American Realty. As a result, several broker/dealers, including AIG Advisor Group LPL Financial and Cambridge Investment Reserach, previously said they were suspending sales of ARCP products. Fidelity, Schwab and Pershing have also followed suit, according to published reports.

On Monday RCS Capital said that its wholesale distribution business recently received 51 reinstated selling agreements. RCS Capital has 1,020 active selling agreements and works with over 250 firms to distribute alternative investment solutions, according to the company’s statement.

"We have consistently communicated to the market our belief that the suspensions of certain of our ongoing selling agreements were of a temporary nature. The reinstatement of these agreements and this initial resumption of sales are confirmation of this belief," said Bill Dwyer, Chief Executive Officer of Realty Capital Securities.

When reached for comment regarding the renewed selling agreements, AIG Advisor Group spokeswoman Linda Malamut said the broker/dealer network was not among those firms that had resumed sales. LPL spokeswoman Amanda Keating said Monday there has been no change on the firm’s position regarding product sales from RCAP and its affiliates. Cambridge also has not changed its position, according to spokeswoman Cindy Schaus.

Schwab also said Monday that there was no change in the company's stance regarding the sales of RCAP products, but that it was continuing to assess the situation, according to spokeswoman Anita Fox. Pershing and Fidelity did not immediately respond to requests for comment Monday morning. Representatives for RCAP did not respond to requests seeking additional information regarding the firms who had re-signed the selling agreements.

Last week, the company’s senior executives have purchased a total of 79,165 shares of the company's Class A common stock in a move attempting to illustrate their position “that the company's current market valuation does not properly reflect the fair value of the business's robust fundamentals, earning power, growth prospects and significant competitive advantages."

RCAP CEO Michael Weil purchased 20,550 shares—worth about $250,000—of the company's stock on Tuesday, according to a Securities and Exchange Commission filing. Shortly after, CFO Brian Jones and COO Brian Nygaard picked up a combined $167,000 worth of stock, filings show. Bill Dwyer purchased 42,000 shares and John H. Grady, RCS Capital's Chief Strategy and Risk Officer, bought 3,815 shares.

Prior to Tuesday, RCAP's stock price had fallen 38 percent since ARCP announced a $23 million accounting error on Oct. 29. By market close Friday, shares were up to $10.90 a share.

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