Securities America is one of several independent financial services firms faced with angry customers who may file arbitration claims in connection to sales of private placement offerings in Medical Capital Holdings, company recently charged with fraud by the Securities and Exchange Commission (SEC).
Specifically, investors say Securities America failed to protect them from the alleged fraud committed by Medical Capital and that even the most basic due diligence would have detected the accounting irregularities and other questionable practices occurring at Medical Capital.
Based in Tustin, California, Medical Capital's core business entails packaging medical receivables and selling them as private placement offerings to investors. According to the SEC, the company raised some $2.2 billion since 2003 through these offering from more than 20,000 investors. Instead of using the money for its core business, however, Medical Capital is accused of “investing” in such things as a Hollywood film (cost: $20 million), a mobile phone application company (cost: $7 million) and a 118- foot yacht.
The SEC also alleges that some of Med Cap's receivables were completely non-existent, while others were seriously overvalued. In addition, the SEC charges that Medical Capital “transferred” receivables from one series of notes to another. Ultimately, these transfers amounted to more than $800 million. Any reasonable due diligence would have immediately revealed this fraud.
As it turns out, Securities America allegedly turned a blind eye to the truth, choosing millions of dollars in commissions and fees over the due diligence it owed to clients.
Securities America is an Omaha, Neb.-based brokerage. Its parent company is Ameriprise Financial, based in Minneapolis.
Securities America and Ameriprise are both named as defendants in a class action lawsuit, which claims the companies violated Nebraska securities law. It also contains allegations of misrepresentation, omissions and negligence Securities America's promotion and sales of Medical Capital notes to investors. The lawsuit seeks class action status to represent investors who bought the notes from Nov. 21, 2007, through July 31, 2008.
Investors who purchased Medical Capital notes from Securities America are encouraged to contact us to explore their legal rights and options. As a member of a class action lawsuit, investors often recover only pennies on the dollar. However, if you have suffered significant losses in Medical Capital notes, filing an individual arbitration claim with the Financial Industry Regulatory Authority (FINRA) may present more opportunities for greater recovery.