RCS Capital (RCAP) — the parent company of the Cetera Financial Group — says it has a new CEO: Bradley E. Scher, 55, an independent director and chairman of RCS Capital’s executive committee.
Larry Roth has vacated that post and remains CEO of Cetera, which includes more than 9,000 independent advisors and is being spun off from RCS Capital. Roth’s resignation “did not result from a disagreement with the company or the board of directors,” according to a filing with the Securities and Exchange Commission.
Scher will be paid $20,000 per month plus expenses but will not receive director fees while serving as chief executive officer of the embattled firm.
For the past 14 years, Scher has been a managing member of Ocean Ridge Capital Advisors, a consulting firm that advises companies, management, investors and other groups “experiencing financial or operating challenges,” according to the SEC filing, posted Friday.
During the past five years, Scher also served as a director on 10 boards of private companies and one public company, Seaco. In addition, he has held management positions including those of president, CFO and chief restructuring officer, with Cedars Funding, Celeritas Management/Spanish Beisbol Network, Graphics Properties Holdings, Nellson Holding, Smith Electric Vehicles and Todobebe.
RCAP shares traded below $0.01 on Friday.
Earlier this month, RCS Capital said that private-equity firms Carlyle Investment Management and Fortress Investment Group, along with asset manager Eaton Vance Management, are letting the company forgo debt payments. These entities are poised to see the money they are lending to Cetera turn into equity shares in the group of independent broker-dealers.
This news followed RCAP’s announcement that it plans to file for bankruptcy and that certain “key stakeholders” are investing $150 million in its IBD unit.
SEC filings stated that RCS Capital can keep the proceeds of its sale of Hatteras Funds, rather than using them to prepay loans. In addition, RCAP was required to present a retention plan for the Cetera advisors to lenders earlier this month.