Realty Capital Securities, a brokerage firm connected to a troubled real estate investment giant AR Capital, is shutting down, its business operation ceases & registration terminates by the end of the week in Boston and all over the country afterwards. A total of 150 employees will be laid off in the process.
According to New York Times, the company will pay a $3 million fine to Massachusetts' securities regulators after it was charged with manipulating proxy votes.
The shutdown comes just weeks after Massachusetts' securities regulator, William F. Galvin, said workers were faking proxy votes in shareholder elections that were crucial to the success of the bigger deal between AR Capital and Apollo.
A $6 million sale to the private equity giant Apollo Global Management was made by Realty Capital, a deal that was connected to an even bigger $378 million deal between Apollo and AR Capital that came to light last month.
RCS Capital's nonexecutive chairman, Mark Auerbach, made a statement last Wednesday saying, "RCS is pleased to confirm it has reached a mutually acceptable resolution with the Massachusetts Securities Division regarding the Division's administrative complaint in connection with RCS's shareholder proxy solicitation process. We are pleased that this matter has been resolved in an efficient and timely manner," Boston Globe reports.
AR Capital, one of the biggest sponsors of real estate investment trusts and a firm built by Nicholas S. Schorsch and William M. Kahane, is not new to such controvery. Just last month, after the Massachusetts charges were made public, the company announced that it would no longer create new investment products and close current ones to just focus on handling the $19 billion it has in current investments.
The troubles of AR Capital's started cropping up a year ago, after Mr. Schorsch left from management and boards of affiliated companies due to accounting scandal.