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.