(Bloomberg) -- RCS Capital said it was contacted by FINRA and the SEC after accounting errors were disclosed at American Realty Capital Properties.
RCS, which operates broker-dealers, said it engages in talks with regulators and state securities administrators as part of its regular operations. The company and its subsidiaries have continued to respond to on-going verbal inquiries, requests for correspondence, information and discussions with the SEC, Finra and such state regulatory agencies, including with respect to the ARCP disclosure,RCS said in a quarterly report filed with regulators today.
The companys shares have fallen 39% since the accounting mistakes were disclosed about two weeks ago, partly because of concern over damage to its business selling nontraded real estate investment trusts sponsored by AR Capital. That company was created by Nicholas Schorsch, RCSs chairman and biggest shareholder, and chairman of American Realty Capital Properties as well. Brokerage firms including LPL Financial Holdings Inc. have said they were suspending sales of some products tied to the New York-based companies.
George Smaragdis, a spokesman for FINRA, said he had no immediate comment. Judith Burns, a spokeswoman for the SEC, declined to comment. Andrew Backman, a spokesman for RCS, didnt immediately respond to a request for comment after regular business hours.
A Boston-based unit of RCS, Realty Capital Securities, also received a subpoena on Nov. 7 from the Securities Division of the Massachusetts Secretary of the Commonwealth asking for certain documents and other materials from the beginning of the year to the present related to sales of some nontraded REITs and similar products affiliated with AR Capital.
Bill Dwyer, chief executive officer of that unit, said on a conference call yesterday that the company is complying with that investigation.
Were going to cooperate fully with them, Dwyer said. I want to reiterate that anything thats transpired was not related to any operating basis at our firm or any performance of any product.
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