NEW YORK, Jan. 30, 2015 /PRNewswire/ -- Pomerantz LLP has filed a class action lawsuit against RCS Capital Corporation ("RCS Capital" or the "Company")(NYSE: RCAP) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 14-cv-10136, is on behalf of a class consisting of all persons or entities who purchased RCS Capital securities between February 12, 2014 and October 31, 2014, inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the "Exchange Act").
If you are a shareholder who purchased RCS Capital securities during the Class Period, you have until February 27, 2015 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business and future acquisition prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) American Realty Capital Properties, Inc.'s ("ARCP") financial statements were materially false and misleading as a result of a massive accounting scandal perpetrated and concealed by senior management, including Nicholas Schorsch; (2) RCS Capital's announced acquisition of Cole Capital from ARCP was at serious risk due to the fraud being perpetrated at ARCP; (3) RCS Capital's revenue stream from its relationship with ARCP was in jeopardy as a result of the accounting scandal at ARCP; and as a result of the foregoing, (4) RCS Capital's public statements pertaining to its financial position as well as the Cole Capital acquisition were materially false and misleading at all relevant times.
On October 29, 2014, ARCP disclosed that its Audit Committee had determined that an "error" in accounting for adjusted funds from operations ("AFFO") had previously been identified within the ARCO, but was intentionally not corrected, and other AFFO and financial statement errors were intentionally made, resulting in an overstatement of AFFO and an understatement of the company's net loss for the three and six months ended June 30, 2014. ARCP also announced that the previously issued financial statements and other financial information contained in the Company's annual report for the year ended 2013, quarterly reports for the periods ended March 31, 2014 and June 30, 2014, and the company's earnings releases and other financial communications for these periods, should no longer be relied upon. Concurrently with this disclosure, ARCP announced the resignation of its Chief Financial Officer and Chief Accounting Officer, both of whom had key roles in preparing the allegedly fraudulent financial statements.
Moreover, according to the Wall Street Journal, the Federal Bureau of Investigation has opened a criminal investigation into ARCP. The SEC also plans to open an inquiry into the company, according to a person familiar with the situation.
As a result of the accounting scandal revealed at ARCP, RCS Capital announced on November 3, 2014 that it has terminated the previously disclosed definitive agreement to acquire Cole Capital from ARCP. On this news, shares of RCS Capital fell $2.72, or more than 16%, on extremely heavy volume, to close at $13.69 on November 3, 2014.
On November 7, 2014, after the close of trading, it was reported on Thinkadvisor.com that Massachusetts regulator William Galvin commenced an investigation of RCS Capital relating to the accounting errors disclosed at ARCP. As a result of this news, shares of RCS Capital fell $0.65, or more than 5.7%, on heavy volume, to close at $10.67 on November 10, 2014.
On December 15, 2014, ARCP issued a press release announcing the resignation of Schorsch as its executive chairman and director. As a result of this news, shares of RCS Capital fell $1.35, or more than 11%, on heavy volume, to close at $10.46, on December 15, 2014.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
SOURCE Pomerantz LLP