Dealing with the fallout from a scandal and an earnings decline at RCS Capital apparently proved too time-consuming for one of the company's board members, Cetera Chief Executive Larry Roth.

Roth quit the board in order to focus on his day job as CEO of Cetera Financial Group, according to the firm. The work as a director had become too much of a distraction, multiple sources say. 

Although Roth was not available for comment and no mention was made by RCS or Cetera as to the nature of the work that consumed Roth on the board, RCS has been undergoing a reorganization following an accounting scandal last year and financial problems this year.

Roth moved to California last year from New York for the Cetera job, but hasn't been at his new home much.

"He's been spending too much time in New York and not really doing his day job and he has a passion for advisors and the retail part of the business," says Dan May, a regional leader in one of Cetera's B-Ds, Cetera Advisor Networks. May says he spoke with Roth on Tuesday.

"I think he came to the conclusion that he needed to resign," May says. "He confirmed to me that it was his choice."

Another director, Peter Budko, stepped down from the RCS board at the same time as Roth in order to devote efforts to the newly created real estate firm AR Global Investments.

"Neither Messrs. Roth nor Budko resigned as a result of any disagreement with RCS Capital or its board of directors," RCS said in a statement.

"He's a B-D guy, not a board guy," another Cetera regional leader, Dave Hubbard, says of Roth.

Roth joined the board on May 1, after Hubbard, May and other Cetera leaders urged RCS Capital to give him a board seat, May says.

"As we came to trust him, we thought that this would allow us to get our voice on the board," he says.

Instead, the opposite appears to have occurred. 


"That's a double-edged sword, being on a board," says Hubbard, CEO of Exemplar Financial in Crystal Lake, Ill. "Having a fiduciary responsibility to all the shareholders, board members can never talk as freely as you might want them to. So, by not being a board member, the conversations [with Roth as Cetera CEO] could be much more frank. I think we could have much better discussions."

Earlier this month, RCS announced it would focus more attention on Cetera after selling off its wholesale distribution division to Apollo Global Management for $25 million.

The move came in the wake of a precipitous drop in earnings in the second quarter, following an accounting scandal last year. For the quarter ending June 30, RCS reported a loss of $66 million, or $1.11 per share, and a 23% decline in revenue to $678 million.

Apollo recently purchased a majority stake in AR Global. RCS also announced this month that Apollo would enter into a "strategic alliance" with Cetera in order to offer the latter sponsored alternative investment products.

RCS's CEO Michael Weil and its Chief Financial Officer Brian Jones continue to serve in their positions while RCS seeks their replacements.


With the sale of the wholesale distribution business, Cetera has become the largest division of RCS. Out of necessity, Hubbard and May think their parent company will continue to listen to what its advisors in the field have to say, even without Roth representing them in New York.

"We're a company of people, not assets," Hubbard says. "We've got to make sure that our advisors have the services that they need, otherwise it doesn't matter what the board does."

Roth intended to devote himself fully to Cetera last year when he left New York and bought a home in California, says May, CEO of AdvisorNet Financial in Dellwood, Minn.

Now, "I think he feels he got his life back and can have a life outside of the job," he says.

And while May doesn't believe Roth left the board, even in part, to distance himself from RCS's recent troubles, Hubbard didn't sound as sure.

"Put it this way," Hubbard says, "I think Larry Roth would want to protect his reputation very much."

Additional reporting by Charles Paikert

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