The Massachusetts State Securities Division has been probing the non-traded REIT market for some time now. Most recently the state has charged Realty Capital Securities (RCS) with fraudulently fabricating shareholder proxy notes.
RCS is a wholesale broker-dealer. The complaint alleges RCS employees impersonated shareholders and cast votes in favor of management proposals. Two RCS employees, were named in the complaint, who allegedly fabricated votes concerning Business Development Corporation of America, an American Realty Capital sponsored investment fund.
In addition, according to the complaint, RCS was providing proxy solicitation services for all AR Capital sponsored funds. Employees allegedly never received any training regarding the solicitation of proxy votes and were under intense pressure to obtain votes. RCS employees purportedly received veiled threats that they would be fired.
In a statement to InvestmentNews, Massachusetts Secretary of the Commonwealth William Galvin said, “This fraudulent activity corrupts the governance of the targeted corporations. Votes taken at corporation meetings affect the rights of investors and their votes should count. Any registered entity whose supervision and oversight is so lax as to allow fabricated proxy votes should not be doing business with the Commonwealth.”
The complaint seeks to revoke the broker-dealer’s registration in the commonwealth of Massachusetts.
The foregoing information, which is all publicly available here, is being provided by The White Law Group.
The White Law Group continues to investigate potential claims involving Schorsch’s REIT empire. If you suffered losses investing in American Realty Capital Properties or another ARC REIT and would like to discuss discuss your litigation options, please call the securities attorneys of The White Law Group at (312)238-9650 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.