A Boston-based brokerage firm, Realty Capital Securities, has agreed to shutdown and pay a $3 million fine to settle the fraud charges filed against them by Massachusetts' securities regulator, William F. Galvin.
"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," said Andrew Backman, a spokesman for RCS Capital, in a statement. "We are pleased that this matter has been resolved in an efficient and timely manner."
The brokerage firm is scheduled to dissolve its registration in the state by the end of the week, and then across the country. The shutting down of Realty Capital Securities will leave more than 150 workers unemployed.
Boston Globe reports that Realty Capital Securities of Boston was alleged by the Massachusetts Securities Division, overseen by Galvin, of faking proxy votes "in favor of management proposals at shareholder meetings of the Business Development Corp. of America, an investment program sponsored by the American Realty Capital." Galvin said that the workers of Realty Capital Securities faked proxy votes during shareholder elections to gain the upper hand in the much more larger deal between AR Capital and Apollo.
The progress in the fraud charges cast a shadow of doubt on the $6 million sale of Realty Capital Securities to the private equity giant, Apollo Global Management. The transaction was associated to an even larger $378 million deal between Apollo and AR Capital that was announced last month.
According to the New York Times report, Realty Capital Securities is a brokerage firm that distributed real estate investment trust products to advisers. It is linked with AR Capital, a firm that makes real estate investment trusts. The brokerage was under the leadership of RCS Capital, which is changing its focus to retail financial advisory services.
