Broker/Dealers That Sold Securities In Provident Asset Management, Medical Capital Holdings Under Fire
Independent broker/dealers and their financial advisers who sold investors private securities tied to Provident Asset Management LLC and Medical Capital Holdings – each of which faces securities fraud charges by the Securities and Exchange Commission (SEC) – could soon find themselves in the hot seat, as well, in the form of investor lawsuits and arbitration claims. Among the firms that reportedly sold either one or both of the investments in Provident and Medical Capital: Securities America, GunnAllen Financial American Portfolios Financial Services, Capwest Securities, J.P. Turner & Co. LLC, National Securities Corp. and Next Financial Group.
As reported July 26, 2009, by Investment News, private placement deals are a lucrative business, garnering brokers big commissions of anywhere from 7% to 10%. The firms themselves typically also receive a fee when their representatives sell the offerings.
Broker/dealers that offer their representatives extremely high payouts, in the range of 95%, are more likely to allow brokers to sell the deals because of the lucrative fees that the firm could gain, the article said.
On July 16, the SEC charged Medical Capital Holdings of Tustin, California, with securities fraud in the sale of $77 million of private securities in the form of notes.
On July 7, the SEC charged Provident Asset Management LLC of Dallas, Texas, of operating a fraud and a Ponzi scheme involving sales of $485 million of preferred stock and limited partnership offerings in oil and gas deals.
The Financial Industry Regulatory Authority (FINRA) already has increased its scrutiny of broker/dealers for sales of Medical Capital Holdings offerings to investors, requesting information from firms that sold the investments to clients on July 16 – the same day the SEC charged Medical Capital with securities fraud.
If you are a client of Securities America, GunnAllen Financial, Next Financial Group, American Portfolios Financial Services, Capwest Securities, J.P. Turner & Co. LLC or National Securities Corp. and were sold limited partnership interests and/or preferred stock in Provident Asset Management LLC or Medical Capital Holdings, we want to hear your story. Tell us about your situation by leaving a message in the Comment Box below or via the Contact Us form.
