NEW YORK (Reuters) - American Realty Capital Properties Inc, the real estate investment trust that creates alternative investments sold to retail investors, said on Monday that Executive Chairman Nicholas Schorsch and two other senior officers have stepped down.
David Kay, who had replaced Schorsch as chief executive officer in the fall, left, along with American Realty President and Chief Operating Officer Lisa Beeson, the company said.
American Realty, which is being investigated by the Federal Bureau of Investigation after announcing a $23 million accounting error in late October that is forcing a restatement of its results for the first half of 2014, said it was unwinding relationships in other entities with which Schorsch is affiliated.
Shares of American Realty were off 6.6 percent to $8.40 at midday.
RCS Capital Corp was down 10.4 percent to $10.58. Schorsch is executive chairman of the company, which owns eight independent broker-dealers.
RCS Capital has not announced changes to its board or management, a spokesman said. Under an acquisition plan engineered by Schorsch, RCS Capital in the past two years became the second biggest independent broker-dealer with more than 9,000 affiliated brokers.
Schorsch has relinquished 1 million restricted American Realty shares he was recently granted, the company said in a Securities and Exchange Commission filing on Monday, but retains 1 million shares granted in October 2013 that recently vested under an accelerated plan.
American Realty said Schorsch will “promptly” return the shares if a court finds him guilty of breaching his fiduciary duty, fraud or misconduct.
RCS Capital executives, who are paid through a management firm controlled by Schorsch, have asserted the company’s independence from American Realty and its management. It also has backed out of a plan to buy an asset management company from American Realty for $70 million since the announcement of the restatement.
RCS Capital stock have fallen more than 35 percent since American Realty’s announcement of the restatement, leading RCS Capital to renegotiate an exchange of preferred shares with a major investor.
Dozens of brokerage firms have suspended agreements to sell mutual funds, illiquid business development companies, nontraded REITs and other alternative investments that were distributed to them through a RCS Capital unit.
William G. Stanley, American Realty’s lead director was named interim CEO and chairman, the company said. He owns a brokerage firm and an investment adviser serving wealthy retail clients.
Reporting by Jed Horowitz; Editing by Lisa Von Ahn and Jeffrey Benkoe