Reps for Securities America, the troubled broker/dealer whose name is now permanently linked to lawsuits and arbitration claims involving sales of failed private placements in Medical Capital Holdings, have been asked to sign a “letter of support” that they plan to remain with the firm. The unusual move has some people suggesting that Securities America is about to be sold.
Ameriprise Financial, the parent company of Securities America, announced in April of its plans to find a new buyer for the company.
As reported June 8 by Investment News, the letter of support to Securities America states the following:
“We are confident in the abilities of Securities America’s senior management team to navigate the company through these challenges and opportunities.
“We believe they will assist [parent company] Ameriprise in the selection of a new owner with the interests of the advisors and our clients firmly in mind.”
It then concludes: “We intend to stay with Securities America to see what opportunities will come from this process.”
Securities America has been embroiled in legal issues since July 2009, when the Securities and Exchange Commission (SEC) charged Medical Capital Holdings with fraud. Dozens of independent broker/dealers sold private placements in Medical Capital to investors, but Securities America was by far the product’s biggest distributor. It sold about $700 million worth of the notes to clients. Nearly half of that amount is now in default.
In April, Securities America reached a potential $160 million settlement with investors in a class-action law suit.