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.