RCS Capital Corp. (RCAP) said today that some broker-dealers have resumed sales of products distributed by RCAP’s wholesale distribution business.
In a statement, the company said 51 selling agreements were “recently reinstated.” RCAP did not say how many broker-dealers had reinstated sales of its direct investments, nor did it mention any B-Ds by name. A broker-dealer may have multiple agreements with a product distributor.
RCAP has 1,020 active selling agreements with more than 250 broker-dealers, the company said.
A number of broker-dealers suspended sales of RCAP-affiliated products in the wake of the accounting misstatement announced at the end of October by American Realty Capital Properties (ARCP).
ARCP, a publicly traded REIT, owns Cole Real Estate Investments, and along with RCAP and American Realty Capital (ARC), is part of the non-traded REIT empire controlled by Nicholas Schorsch.
Several broker-dealers that have suspended sales of some ARC and Cole products told Financial Advisor on Monday that those suspensions remained in effect.
Spokespersons for LPL Financial, Securities America, Cambridge Investment Research, National Planning Holdings and the Advisor Group of broker-dealers said there had been no change in the status of their selling-agreement suspensions.
Spokespersons for RCAP did not respond to requests for comment.
The suspensions have clearly hurt the wholesale business, which accounts for more than a third of RCAP’s revenues.
Earlier this month, RCAP declined to give future guidance for the wholesaling business due to the disruptions caused by the ARCP problem, but company officials said they expected most suspensions to be lifted by year-end.
The product wholesaling unit, now run by former LPL Financial executive Bill Dwyer, is the dealer-manager for ARC products. ARC-affiliated offerings account for most of its sales, according to RCAP’s SEC filings.
In addition, RCAP chief executive Michael Weil said this month that the company is undertaking a strategic review, and left open the possibility that the company’s retail brokerage unit could be separated from its product wholesaling business.
After ARCP disclosed its accounting issue, RCAP quickly backed out of an agreement to acquire Cole Capital from ARCP. The two companies, RCAP and ARCP, are now litigating that failed agreement.