The ongoing RCS Capital saga has taken an unexpected twist with the appointment of Larry Roth as chief executive officer.
Roth, a high profile industry veteran who is currently CEO of Cetera Financial Group, the large independent broker-dealer network with over 9,000 advisors owned by RCS, resigned from the RCS board of directors earlier this fall after serving for only four months.
But the same board named Roth RCS CEO yesterday, albeit in a curiously low-key manner: the fourth paragraph of a press release announcing disappointing third quarter earnings results. The company did not issue a separate release, nor did it have any public comment on Roth's appointment.
Michael Weil has stepped down effective immediately as the company's CEO, but will remain on the board of directors.
CETERA FATE UNCLEAR
The fate of Cetera remains unclear.
RCS reportedly put the company up for sale last month, but in the earnings announcement, Roth said the company is "continuing to focus on driving growth in our advisory business, both through traditional and digital channels."
In addition, RCS non-executive chairman Mark Auerbach said in the earnings release that the company's business model is "to refocus the business as a Cetera-only organization" and that "the transition of RCS Capital to a retail-focused entity is underway."
The third quarter earnings results reflected RCS' ongoing woes. The holding company posted a $266.5 million net income loss from continuing operations for the quarter ended September 30. RCS lost $33 million during the same period last year, and has lost $340 million over the past nine months.
STOCK AND REGULATION WOES
Earlier this month, RCS Capital stock, which has been trading under 40 cents a share and has lost nearly 100% of its value over the past year, is in danger of being delisted on the New York Stock Exchange.
Last week, Realty Capital Securities, a division of RCS Capital, also known as RCAP, was charged by Massachusetts Secretary of the Commonwealth William Galvin with fraudulently amassing proxy votes to support real estate deals sponsored by AR Capital, a privately held real estate management company owned by RCS founder Nicholas Schorsch and his partner William Kahane.
RCS has also had to call off and then amend a multimillion dollar deal to sell its wholesale distribution business to Apollo Global Management. RCAP eventually sold the business, including Realty Capital Securities and Strategic Capital, to Apollo for $6 million in cash, less than one-fourth the price of the original deal.
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