A family feud appears to be widening the cracks in Nicholas Schorsch's financial empire.

RCS Capital, Schorsch's advisory business, has abruptly terminated a deal to buy Cole Capital from American Realty Capital Properties -- the flagship company of Schorsch's sprawling property and REIT business.

The unexpected move came just days after American Realty Capital replaced its chief financial and chief accounting officer following revelations that accounting errors totaling around $23 million at the company went intentionally uncorrected.

American Realty, the largest owner of single-tenant buildings in the U.S., is facing an investigation by the FBI following the disclosures, according to reports by Bloomberg and Reuters. The SEC is also investigating the giant REIT, which has spent around $15 billion on acquisitions since going public three years ago, according to The Wall Street Journal.

The two publicly traded companies are separate entities, but Schorsch has a controlling interest in both. He is co-founder, chairman and CEO of American Realty Capital, and the executive chairman at RCS.

SURPRISE SPLIT

The surprise announcement this morning that RCS was cutting ties with Cole -- after agreeing to buy the company just a month ago for $700 million -- appears to have unveiled a serious rift within the Schorsch empire.

A press release issued by American Realty Capital in response to the termination announcement reads like a mystery novel:

"In the middle of the night, we received a letter from RCS Capital Corporation purporting to terminate the equity purchase agreement, dated September 30, 2014, between RCS and an affiliate of ARCP," the statement said. "As we informed RCS orally and in writing over the weekend, RCS has no right and there is absolutely no basis for RCS to terminate the agreement. 

"Therefore, RCS's attempt to terminate the agreement constitutes a breach of the agreement," the release continued. "In addition, we believe that RCS's unilateral public announcement is a violation of its agreement with ARCP."

(An RCS spokesman reached out after this story was originally published with a statement that appeared to tie the cancelation of the deal to last week's revelation of the accounting errors. "The RCAP board of directors determined that it is appropriate for RCAP and the other businesses on the platform to terminate the agreement in light of the disclosures made by ARCP on Wednesday, October 29," the spokesman said.

The RCS board decided to terminate the deal based on its review of "the facts and circumstances and on their understanding of their fiduciary duties owed to RCAP shareholders," the spokesman added. As a result, the company moved "swiftly and decisively to protect its franchise" and its stockholders, he said.)

DEAL SPREES

Both American Realty and RCS have been on freewheeling acquisition sprees over the past few years. In fact, hedge fund Marcato Capital Management -- one of American Realty's largest shareholders -- criticized the REIT in a letter to the board of directors for "engaging in too many transformative transactions too quickly," the Journal reported.

American Realty acquired Cole's parent company, which was a major REIT competitor, for $7.3 billion last year; it also bought more than 500 Red Lobster restaurant locations for $1.5 billion earlier this year.

RCS, meanwhile, has bought a string of advisory firms in the past two years, including giant IBD network Cetera Financial Group for $1.15 billion earlier this year; the deals have helped boost the firm's advisor count to around 9,000.

In an SEC filing in the spring, RCS said it was planning to make more acquisitions, but also listed a number of serious risk factors the deals brought with them -- including debt service obligations, retaining senior executives and potential advisor misconduct.

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