Updated at 8:20 a.m. for news on American Realty Capital Properties filing delay.
NEW YORK (TheStreet) -- The accounting scandal at real-estate mogul Nicholas Schorsch's American Realty Capital Properties (ARCP) last month had a ripple effect on a second public company the billionaire controls -- RCS Capital Corp. (RCAP) . With its shares plunging, RCS Capital hired an outside law firm and forensic accounting firm to review its financials for the first nine months of 2013, the company said Thursday.
That was the period during which Brian S. Block, the CFO who resigned from American Realty Capital Properties amid the scandal, had been signing off on RCS Capital's financials. He resigned as CFO of RCS Capital in December and became full-time CFO of American Realty Capital Properties.
Just two weeks after the accounting mishap, law firm Cleary Gottlieb Steen & Hamilton and accounting firm McGladrey have completed their review and, "we consider the question of RCS Capital's accounting integrity as closed," said CEO Michael Weil during an analyst conference call Thursday. .
The clean bill of health issued Thursday at RCS Capital for the nine-month period is a plus. But the company has yet to elucidate some important history: In filings with the Securities and Exchange Commission, RCS Capital flagged "significant deficiencies" in its internal controls over financial reporting for the third quarter of 2013, the full year 2013, and the first quarter of this year.
Weil said during the conference call that the lawyers and accountants did not review the fourth quarter of 2013 because those financial statements "are certified by our present CFO, Brian Jones."
Investors dumped shares of RCS Capital and American Reality Capital Properties last month after the latter company announced that Block and another senior financial executive resigned over the cover up of an accounting mistake. Schorsch is chairman of American Realty Capital Properties and executive chairman of RCS Capital.
On Friday American Realty Capital Properties announced its lenders had consented to a delay until January 5 for filing its third quarter financial reports. The delay will allow the firm to comply with borrowing obligations while external auditors complete their review of American Realty Capital Properties' 2013 and 2014 financial statements, the company said.