Point72 Stake

RCS shares, which were down as much as 46 percent since the ARCP news, have pared some of that loss. The company has attracted at least one big investor: Point72 Asset Management LP, the family office for billionaire Steven A. Cohen, disclosed this week that it increased its stake to 5.1 percent. Weil bought almost $250,000 of RCS stock this week, according to a regulatory filing.

ARCP and RCS have a history of ties. Schorsch, who controls RCS with 11 other directors and executive officers, founded ARCP and was its chief executive officer until stepping down last month as part of a planned succession.

Block, 42, served on RCS’s board until July and was its financial chief until December. He also resigned from his positions at AR Capital REITs to focus on his full-time job at ARCP. He was key to the creation of AR Capital where, as his company biography states, he was “instrumental in developing ARC’s infrastructure and positioning the organization for growth.”

“Block was the CFO and a key member of the management team across many of the ARC entities over the last several years,” said Gannon of Robert A. Stanger.

Audit Review

An outside law firm and forensic auditor reviewed RCS’s financials from the first nine months of the year when Block was CFO and confirmed its books were clean. Previous financial statements remain as reported, and no material weaknesses have been identified, RCS’s Backman said

RCS and ARCP are both located at 405 Park Ave. in midtown Manhattan. RCS corporate filings list its main offices on the 14th floor, while ARCP’s are on the 15th. The contact number listed on the ARCP website is the same as for the CFO and managing director of investor relations on the RCS website.

RCS sent a letter on Nov. 3 saying it called off the Cole deal because those firms “have not devised and maintained a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes,” according to the lawsuit.

Stock Decline

ARCP, in its lawsuit last week, said RCS’s attempt to terminate the deal “had everything to do with curbing the price decline in RCAP’s stock (in which Mr. Schorsch owns a significant interest), and not with the breach of any representation or warranty made by ARCP.”

Schorsch has a $223 million stake in RCS, both direct and indirect, compared with ARCP holdings of $162 million, according to a Nov. 14 Bloomberg Intelligence analysis.

RCS ended the Cole agreement in light of the ARCP accounting disclosures, Backman said in an e-mailed statement.

“RCS Capital moved swiftly and decisively to protect its franchise, the interests of its shareholders and the ongoing prospects and continuing enterprise value of the company and its subsidiaries,” he said.