Tuesday, January 26, 2010

Massachusetts Files Charges Against Securities America Regarding Medical Captial Holdings Inc.

Today, Massachusetts Secretary William Galvin brought the first state enforcement case against Ameriprise Financial’s (AMP) Securities America unit. State regulators are charging the broker/dealer with improper sales of risky promissory notes in (506) private placement deals. The claim alleges that Securities America knowingly marketed and sold notes issued by Medical Capital Holdings Inc, a now defunct Tustin, California based medical receivables company, as safe investment to everyday retail investors.

The reality is, private placement deals are meant only for institutional and well adept investors, and such products represent a high degree of risk. Galvin estimates that over 60 Massachusetts residents bought $7.2 million worth of the offering, this representing only a fraction of the total..

The notes were sold over a period of time in which Securities America actively marketed the products, even after having received a warning from a top company official of potential issues at Medical Capital. The Securities and Exchange Commission (SEC) filed civil fraud charges against Medical Capital 2009 and is currently attempting to preserve company assets in an attempt to preserve at least some of the investors’ capital.

Regardless, many have turned to Financial Industry Regulatory Authority (FINRA) arbitration as a means to recoup their investment loss. The self regulatory agency (SRO) has increased enforcement on private placement deals in line with current SEC filings.

To view the Massachusetts complaint in addition to SEC filings, click here.

No comments: