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

A hearing will be held before the Honorable George B. Daniels of the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, Courtroom 11 A, 500 Pearl Street, New York, NY 10007 at 10:00 a.m. on September 28, 2017 to, among other things, determine whether the Court should: (i) approve the proposed Settlement as fair, reasonable, and adequate; (ii) dismiss the Action with prejudice as provided in the Stipulation and Agreement of Settlement, dated June 2, 2017; (iii) approve the proposed Plan of Allocation for distribution of the Net Settlement Fund; and (iv) approve Lead Counsel’s application for an award of attorneys’ fees and payment of Litigation Expenses.  The Court may change the date of the Settlement Hearing without providing another notice.  You do NOT need to attend the Settlement Hearing to receive a distribution from the Net Settlement Fund.

The papers will be posted to this website under the “Court Documents” link on the left.   

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.

The Rights of Settlement Class Members

If you are a Settlement Class Member, you have the following options:

Submit a Claim Form

To qualify for a payment from the Net Settlement Fund, you must submit a timely and valid Claim Form and supporting documentation.  A Claim Form is included with the Notice or you may download a Claim Form under the “Claim Form” link on the left.   You may also file a Claim Form online under the “File Online Claim Form” link on the left by November 2, 2017. You may also request a Claim Form by calling (866) 778-9626 or e-mailing info@casespecificemail.com. The Claim Form and the required documents must be sent to the address  printed in the Claim Form or submitted online and must be postmarked or received  no later than November 2, 2017.