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American Realty Capital sues over failed $700M deal
Schorsch firm mired in accounting scandal claims agreement was wrongly terminated
Nicholas Schorsch’s American Realty Capital Properties, facing lawsuits and a Securities and Exchange Commission probe over a recent accounting scandal, is filing a suit of its own – against another Schorsch-chaired firm.
American Realty Capital alleged that retail investment sales brokerage RCS Capital wrongly terminated an agreement to acquire Cole Capital Advisors for $700 million.
The deal was nearing final negotiations just prior to American Realty’s announcement regarding inflated quarterly earnings.
“Under the circumstances, the independent members of the ARCP Board of Directors and ARCP had no choice but to file this litigation in order to preserve and protect the interests of ARCP’s shareholders under the purchase agreement,” American Realty Capital said in a statement to Bloomberg News.
Paul Adornato of BMO Capital Markets told the website that executives at RCS might have canceled the deal over concerns that the scandal would impact the company’s plans to sell shares of real estate investment trusts. [Bloomberg News] — Mark Maurer