***IMPORTANT CASE UPDATE***

On December 5, 2022, residual distribution checks were mailed to Authorized Claimants who cashed their initial payment and were eligible to receive an additional payment under the Plan of Allocation. Please address any questions regarding your payment to the Claims Administrator.

The information contained on this web page is only a summary of information presented in more detail in the Notice of Pendency of Class Action, Proposed Settlement, and Motion for Attorneys’ Fees and Expenses (the “Notice”), which you can access by clicking here. Since this website is just a summary, you should review the Notice for additional information.

If you are a Settlement Class Member, your legal rights will be affected by the Settlement whether you act or do not act.

Please read the Notice carefully.

IF YOU PURCHASED OR OTHERWISE ACQUIRED THE COMMON STOCK OF RCS CAPITAL CORPORATION DURING THE PERIOD FROM FEBRUARY 12, 2014 TO DECEMBER 18, 2014, INCLUSIVE, AND WERE ALLEGEDLY DAMAGED THEREBY, YOU MAY BE ENTITLED TO A PAYMENT FROM A CLASS ACTION SETTLEMENT. 

The Settlement Hearing

The Court held a final Settlement Hearing on September 28, 2017, and approved the Settlement, proposed Plan of Allocation and the motion requesting attorneys' fees and expenses. A copy of the order can be accessed on the Court Documents section.

What is this case about?

The Action arises from an alleged accounting fraud at American Realty Capital Properties, Inc. (“ARCP”), a public real estate investment trust that shared a number of directors with RCAP, which was allegedly perpetrated and concealed by Defendant Schorsch (co-founder of RCAP and Executive Chairman of RCAP’s board of directors) and other senior management of ARCP.  RCAP is a wholesale broker-dealer and investment banking and advisory business, with the majority of its revenues during the Class Period generated from services provided to AR Capital, LLC (“ARC”), a real estate management company that also shared a number of directors with RCS.  Those services included the wholesale distribution of ARC’s investment products.  Throughout the Class Period, Defendants, among other things, allegedly made false and misleading statements and omissions regarding the strength of RCAP’s business prospects, emphasizing RCAP’s ability to leverage its relationship with Schorsch-related entities.

On June 1, 2015, Lead Plaintiffs filed an Amended Class Action Complaint for Violations of Federal Securities Laws, and, on June 30, 2015, Lead Plaintiffs filed the operative Corrected Amended Class Action Complaint for Violations of Federal Securities Laws (the “Complaint”), asserting claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”) and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 (17 C.F.R. §240.10b-5) promulgated thereunder.  In general, the Complaint alleged that Defendants violated the federal securities laws by making materially false and misleading statements and omissions concerning the strength of RCAP’s core wholesale distribution and investment banking business and its prospects for success.  As alleged in the Complaint, because of the alleged entanglement of RCAP, ARCP, and ARC, and the fact that investors associated all of those entities with Defendant Schorsch, the alleged accounting manipulations that occurred at ARCP undercut the credibility, reputation, and business operations of RCAP, as well as ARCP, and rendered Defendants’ statements concerning the strength of RCAP’s wholesale distribution and investment banking business and its prospects for growth success, false and misleading.  The Complaint further alleged that the price of RCAP common stock was artificially inflated as a result of Defendants’ allegedly false and misleading statements, and declined when the truth was revealed.

In September 2016, the Parties engaged Mr. Robert A. Meyer, a well-respected and highly experienced mediator, to assist them in exploring a potential negotiated resolution of the claims in the Action.  On November 14, 2016, the Parties participated in a full-day mediation session with Mr. Meyer in an attempt to reach a settlement.  In advance of the mediation session, the Parties provided detailed mediation statements and exhibits to the Mediator which addressed the issues of both liability and damages.  Following arm’s-length and mediated negotiations under the auspices of Mr. Meyer, on March 20, 2017, the Parties reached an agreement-in-principle to settle the Action.

In light of the Settlement and the guaranteed cash recovery to the Settlement Class, Lead Plaintiffs and Lead Counsel believe that the proposed Settlement is fair, reasonable, and adequate, and in the best interests of the Settlement Class.

The Settlement Benefits

Defendants have agreed to cause a $31 million cash payment to be made, which, along with any interest earned on this amount, will be distributed after deduction of Court-awarded attorneys’ fees and Litigation Expenses, Notice and Administration Costs, Taxes, and any other fees or expenses approved by the Court (the “Net Settlement Fund”), among all Settlement Class Members who submit valid Claim Forms and are found by the Court to be eligible to receive a distribution from the Net Settlement Fund (“Authorized Claimants”).

If the Settlement is approved by the Court, the Net Settlement Fund will be distributed to eligible Authorized Claimants in accordance with the proposed Plan of Allocation or such other plan of allocation as the Court may approve.  Settlement Class Members who do not timely submit valid Claim Forms will not share in the Net Settlement Fund, but will otherwise be bound by the Settlement.  The Court may approve the proposed Plan of Allocation, or modify it, without additional notice to the Settlement Class.  Any order modifying the Plan of Allocation will be posted on this website.

Further Information:

This website and the Notice summarizes the Settlement.  For more details regarding the Settlement please reference the Stipulation and Agreement of Settlement, or other documents filed in the case under the “Court Documents” link on the left.  You may also contact the Claims Administrator or Lead Counsel for further information regarding the Settlement:

Claims Administrator:

RCAP Securities Litigation
c/o A.B. Data, Ltd.
PO Box 173040
Milwaukee, WI  53217
(866) 778-9626
info@casespecificemail.com
www.RCAPSecuritiesSettlement.com

Lead Counsel:

www.labaton.com

If you have questions, you may call the RCAP Securities Litigation Help Line at (866) 778-9626 or email info@casespecificemail.com.