Massachusetts Fines Seven Broker-Dealers Over Proxy Voting Fraud Involving Realty Capital Securities

Secretary of the Commonwealth of Massachusetts William Galvin is ordering seven brokerage firms to pay $238K in fines for their involvement in the proxy fraud committed by Realty Capital Securities. The broker-dealers are:

· Voya Financial Advisors Inc. (VOYA)
· Invest Financial Corp.
· FMN Capital Corp.
· Platinum Wealth Partners Inc.
· Newbridge Securities Corp.
· TKG Financial
· Pariter Securities

Galvin claims that brokers at the firms worked with RCS to cast the bogus proxy votes involving American Realty Capital Healthcare Trust II and American Realty Capital Trust V—both nontraded real estate investment trusts—and Business Development Corp. of America, which is a nontraded business development company. The state’s securities division claimed that RCS employees pretended to be shareholders so they could cast proxy votes to the benefit of management. The votes were key in the merger between American Realty Corp., which is a Real Capital Securities affiliate, and Apollo Global Management. The deal was linked to a larger deal of $378M between AR Capital and Apollo.

Galvin said that registered agents at the seven firms turned in unauthorized proxy votes for clients with interests in American Realty Capital Investments programs. The orders against the broker-dealers include a permanent cease and desist mandate, revisions to policies and procedures related to proxy voting, a censure, and the fines.

Real Capital Securities closed down its business several months ago. It also agreed to pay Massachusetts’ securities regulators a $3M to resolve the manipulating proxy vote allegations. While in business the brokerage distributed REIT products to advisers. It was part of RCS Capital.

At The SSEK Partners Group, our securities fraud lawyers are here to help investors recoup their losses sustained because of the wrongful or negligent acts committed by brokerage firms, investment advisory firms, brokers, financial advisers, and other members of the securities industry. We have helped thousands of investors recoup their losses. Contact us today. Your initial case consultation with one of our nontraded REIT fraud lawyers is a free, no obligation session.

Realty Capital Securities to Shut Down and Pay $3 Million Fine to Massachusetts, New York Times December 15, 2015