(Adds reactions of investors to announcement and details from regulatory filing)
Nov 24 (Reuters) - RCS Capital Corp on Monday said some brokerage firms that had suspended sales of non-traded real estate investment trusts it sponsors because of its suspected ties to a troubled company had reinstated their sales agreements.
RCS, which owns eight brokerage firms and a business that supplies the illiquid REITs and other “alternative” investment products to other broker-dealers, called the resumption a vote of confidence but did not say how many of the 250-plus companies in its sales network had suspended sales or how many have reinstated them. It said only that 51 selling agreements resumed and did not respond to queries about whether any were with its own brokerages that had frozen sales of some products.
Among larger firms in the sales network, Fidelity Investments has not resumed sales of RCS products to broker-dealers and investment advisers, a spokeswoman said. A spokeswoman for LPL Financial, which provides products to more than 13,000 independent brokers, did not respond to a request for comment.
The paucity of specifics appeared to concern investors already worried about RCS’s intertwined relations with American Realty Capital Properties Inc.
RCS shares, which had risen more than 2 percent to $11.12 before Monday’s announcement, closed up less than 1 percent at $11.
Firms pulled their sales after ARCP on Oct. 29 disclosed a $23 million accounting error and, subsequently, regulatory investigations. Since then, RCS shares have fallen about 36 percent.
RCS has repeatedly asserted its autonomy from ARCP, but a real estate entrepreneur named Nicholas Schorsch is executive chairman of RCS, chairman of ARCP and co-CEO of an ARCP affiliate that manages RCS’s business and pays its management team.
RCS also gives 10 percent of its pretax profit plus incentive fees to the ARC affiliate, it said in its annual proxy statement in April. Those fees in the six months after RCS’s June 2013 initial public offering totaled $6.5 million, according to the proxy statement.
“We have consistently communicated to the market our belief that the suspensions of certain of our ongoing selling agreements were of a temporary nature,” Bill Dwyer, CEO of the wholesaling business, said in a statement on Monday. He underscored his confidence by saying he recently bought 42,000 RCS shares. (Reporting by Jed Horowitz; Editing by Lisa Von Ahn)