Cetera Reorganizes as Former Schorsch Associate Consents to SEC Judgment
The Securities and Exchange Commission said Wednesday that it obtained a final judgment against Brian Block, the former chief financial officer of American Realty Capital Partners (ARCP) whose alleged manipulation of a financial metric triggered the collapse of the real estate investment trust founded by Nicholas Schorsch.
The judgment, which included a $160,000 civil penalty and a permanent bar against Block serving as a broker-dealer officer, followed by a day an announcement of a major reorganization of Cetera Financial Group. Cetera is the independent broker-dealer network that Schorsch had cobbled together in 2013 and 2014 to distribute privately traded real estate investment trusts that his companies sponsored to retail investors.
Block, who the SEC charged in September 2016 with overstating ARCP’s performance by inflating a key metric used by analysts and investors to assess the company, was earlier convicted of fraud and related charges that included a $100,000 fine and an 18-month prison sentence that he is now serving. The SEC said on Wednesday that he also has consented to the regulatory agency’s order suspending him from appearing or practicing before the Commission as an accountant.
Cetera, which has streamlined into six broker-dealer units from more than 10 since its parent company RCS Capital’s bankruptcy in 2016, said on Tuesday that it has split the six into two channels and put new leaders atop most of them to improve advisor support and efficiencies.
Its so-called traditional channel of standard solo and group practices includes Cetera Advisors, First Allied Securities and Summit Brokerage Services. Its “specialty” channel includes Cetera Financial Institutions and Cetera Financial Specialists, which respectively offers brokerage services to credit union customers and to tax advisors branching into wealth management, as well as Cetera Advisor Networks, which aims at large independent practices (offices of supervisory jurisdictions, or, in Cetera’s lexicon, “Regional Director-led firms”).
Cetera has recruited Mimi Bock to be president of Cetera Advisors and First Allied Securities. She was most recently executive vice president for national sales & consulting at LPL Financial, the biggest independent broker-dealer that was also the former home of Cetera Financial Group CEO Robert Moore. Bock also worked for about 20 years at Morgan Stanley and its Dean Witter predecessor, where her titles included managing director of global wealth management marketing.
Brett Harrison, who had led Cetera Advisors, will be overall head of the “traditional” channel. Marshall T. Leeds will continue to serve as president and CEO of Summit, the channel’s smallest broker-dealer.
Moore said that the Specialty Channel will be led by Tom Taylor, who will also continue to serve as CEO and President of Cetera Advisor Networks. LeAnn Rummel will remain as President of Cetera Financial Institutions and Gregg Ruvoli will continue to serve as President of Cetera Financial Specialists.
As part of the reorganization, Cetera Financial Institutions CEO Catherine Bonneau has been named chief operating officer of the parent company and Tim Stinson, formerly national sales manager for the company, has taken the newly-created position of Head of Wealth Management.