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RCS Capital Brokerage Unit Charged over Fraudulent Proxy Votes

November 16, 2015

The wholesale-brokerage arm of RCS Capital is in the crosshairs of Massachusetts state regulators for — says Secretary of the Commonwealth William Galvin — casting fraudulent proxy votes, Reuters reports. And the company is already struggling to remain on the NYSE, according to InvestmentNews.

The agency wants to impose penalties and revoke the broker-dealer registration of a Boston subsidiary of the company, Realty Capital Securities, Reuters states. At issue are at least two votes said to have been fabricated in relation to the Business Development Corporation of America, an investment fund sponsored by American Realty Capital, explains the news service. In two instances, people working for Realty Capital “used a contrived accent” to impersonate shareholders and proxy-vote in the fund management’s interest, the complaint alleges. But investigators believe the practice extends to “numerous proxy votes,” Reuters writes.

The charge comes shortly after RCS Capital received a warning from the NYSE about its stock — under the ticker RCAP — trading below $1. This, InvestmentNews points out, is grounds for delisting if RCAP doesn’t find safer footing within six months.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here (free registration required).
  • To read the Reuters article cited in this story, click here.