The Other Shoe Drops: Nick Schorsch Steps Down From RCS Capital, New York REIT

The agonizing wait for shareholders and registered investment advisors is now over.

Nick Schorsch on Tuesday resigned as chairman at RCS Capital Corp RCAP and New York REIT Inc NYRT.

According to Bloomberg, Schorsch has chosen to also resign from 11 affiliates of AR Capital, his non-traded REIT sponsorship entity.

Shares of RCS Capital traded recently at $12.05, up 6.6 percent.

ARCP Scandal Spills Over

The accounting scandal and cover-up at American Capital Realty Properties Inc ARCP, as well as the ill-fated attempt to sell its non-traded REIT business unit Cole Capital to RCS Capital, has finally forced Schorsch out of the boardrooms of his entire REIT empire.

Schorsch had previously stepped down as ARCP Executive Chairman and resigned his positions at the head of the Cole Capital non-traded REITs.

Related Link: The Biggest REIT Story Of 2014

Why Was This Necessary?

The ability for RCS Capital to raise funds for its non-traded REIT programs was compromised by the growing scandal.

The crises in confidence, which began with the accounting revelations at American Capital Realty, immediately spawned ripples that quickly grew into waves of discontent throughout the independent broker/dealer community.

Non-traded REITs, and other alternative assets products and funds that are sold by financial advisors to high net-worth individuals, are the life-blood of firms such as RCS Capital and Cole Capital.

Tale Of The Tape

Clearly, Mr. Market felt that Schorsch's move was long overdue.

Now What?

Unfortunately for shareholders, this story will not end here.

There are multiple lawsuits pending, as well as investigations by the FBI and state regulators.

However, Schorsch's resignation announcement may be the first step in the on-going battle to regain both investment advisor and shareholder confidence at RCS Capital.