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Schorsch-linked firm rigged shareholder vote: regulator

RCS Capital employees allegedly fabricated votes for changes required by Apollo deal

November 16, 2015 08:47AM

William Gavin Nicholas Schorsch

From left: William Gavin and Nicholas Schorsch

Massachusetts’ top securities regulator accused a company partly owned by Nicholas Schorsch of a complex corporate governance manipulation scheme connected with the now-defunct $378 million deal that was being negotiated between Schorsch’s AR Capital and Apollo Global Management.

Secretary of the Commonwealth William Galvin said that employees of Boston-based broker-dealer Realty Capital Securities, a subsidiary of RCS Capital, fabricated proxy votes and impersonated shareholders in an attempt to influence a vote by the board of another Schorsch-connected firm, Business Development Corp. of America.

That vote would have altered BDCA’s charter so as to accord with requirements set forth in the potential AR Capital-Apollo deal.

Regulators seek to revoke RSC’s broker-dealer status, Bloomberg reported.

The complaint does not accuse AR Capital, RCS Capital or Apollo of wrongdoing.

Last week, AR Capital and Apollo announced they’d terminate talks over a possible deal in which Apollo would have acquired a 60 percent stake in a new company, AR Global Investments, that would have controlled a $19 billion asset portfolio. [Bloomberg]Ariel Stulberg