Securities America CFO Kelly Windorski testified today that the broker/dealer could potentially go under if a settlement in a $21 million class action lawsuit is not reached. Judge W. Royal Furgeson Jr. is expected to make his ruling later tonight, according to a March 18 article by Investment News.
The class action lawsuit, as well as numerous arbitration claims filed with the Financial Industry Regulatory Authority (FINRA), involves private-placement deals in Medical Capital Holdings and Provident Royalties. Both firms were charged with fraud by the Securities and Exchange Commission (SEC) in July 2009.
If the judge in the class action approves a settlement in the case, investors who lost millions of dollars from Med Cap and Provident investments sold by Securities America are likely to receive only 5 cents on the dollar for their losses.