Schorsch's empire is in turmoil with rapid REIT fallout.

The biggest independent broker-dealers in the business are giving Nicholas Schorsch and REITs tied to his empire a thumbs-down.

LPL Financial announced Tuesday that it is “indefinitely suspending sales of investment products sponsored by American Realty Capital Properties Inc. (ARCP), and RCS Capital Corp. (RCAP) and their respective affiliates,” the group said in a statement.

Some 13,900 independent advisors are affiliated with the IBD. With LPL’s announcement, about 25,600 independent advisors are suspended from selling at least some ARCP REITs.

Earlier Tuesday, the AIG-owned Advisor Group, which includes 6,000 reps, said in a statement that “due to recent disclosures of accounting irregularities made by American Realty Capital Properties, [it] has chosen to suspend sales in the following two real estate investment trusts (REITs) effective immediately: American Realty Capital New York City REIT [and] Phillips Edison-ARC Grocery Center REIT II.”

LPL Financial and the Advisor Group are closely tracking developments at RCAP and ARCP for a number of reasons.

RCS Capital’s broker-dealer operations are led by Larry Roth, the former head of the Advisor Group. Roth switched firms about a year ago and initially served as CEO of Realty Capital Securities (the group’s nontraded REIT broker-dealer and wholesale arm).

Several weeks ago, however, Roth became head of RCS Capital’s independent broker-dealer operations, Cetera Financial Group; Cetera has been expanding through acquisitions of IBDs and now has some 9,700 affiliated reps.

With Roth’s move to Cetera, Bill Dwyer, the former president of LPL Financial’s (LPLA) Independent Advisor Services unit, was invited to come out of retirement and take the helm of Realty Capital Securities.

“At this time, the [sales] suspensions are considered temporary, but indefinite, and will remain in effect until AIG Advisor Group’s due diligence team has time to review potential implications of the recent news regarding ARCP,” Advisor Group explained, noting that it has not suspended sales of other ARCP products.

The Advisor Group includes Royal Alliance, FSC Securities, SagePoint Financial and Woodbury Financial.

Other IBD Suspensions

On Friday, Securities America moved to temporarily suspend new sales of the non-traded Phillips Edison-ARC Grocery Center REIT II and Cole Capital Properties V. The group includes roughly 1,700 affiliated advisors and is owned by Ladenburg Thalmann (LTS).

This followed the news Thursday that the four National Planning Holdings broker-dealers told its nearly 4,000 reps that it had temporarily suspended new sales of the Phillips Edison–ARC Grocery Center REIT II. The four broker-dealers are National Planning Corp. (or NPC), Invest Financial Corp., Investment Centers of America and SII Investments.

Calls to RCS Capital about these developments were not returned as of press time.

— Check out More Cracks in Schorsch Empire as RCAP Dumps Cole Deal on ThinkAdvisor.