Investment Fraud Lawyer Blog

The list of independent broker-dealers that sold private offerings and are now out of business, is impressive. The private offerings include Provident Royalties LLC, Medical Holdings Inc., and DBSI Inc. So far, the list of B-Ds that have closed since 2010 includes, but is not limited to, QA3 Financial Corp., Jesup & Lamont Securities Corp., GunnAllen Financial Inc., Securities Network LLC, Omni Brokerage Inc., and most recently, WFP Securities. See series of InvestmentNews articles by Bruce Kelly entitled “Securities Network latest B-D to close its doors,” “Omni present no longer: Brokerage latest B-D to close,” and “WFP Securities bites the dust.”

Continue reading "Reg D and Other Private Offerings are Dangerous for Brokerage Firms as well as their Clients" »

Simply stated, senior investors (in fact, all investors) should be very leery of high-risk structured products. Author John Wasik, in conjunction with Demos and The Nation Institute, has published a white paper entitled “How Safe Are Your Savings? How Complex Derivative Products Imperil Seniors’ Retirement Security.” The paper’s focus is on structured products and how they are mis-marketed to seniors, the group most in need of safe and secure income. The paper is reportedly the result of more than a year of research involving interviews with investors, state securities regulators, investors’ attorneys and officials with the Securities and Exchange Commission (SEC).

Continue reading "Study: Structured Products Pose Huge Risks to Investors' Portfolios" »

Securities America is on the shopping block, according to an InvestmentNews article by Bruce Kelly entitled “Ameriprise shopping Securities America.” The firm was sued along with Ameriprise Financial by a class of people who purchased hundreds of millions of fraudulent securities issued by Medical Capital and Provident Royalties. Ameriprise Financial is the corporate parent of Securities America.

Continue reading "Troubled Securities America is "For Sale"" »

InvestmentNews has reported that FINRA has issued the first in an anticipated series of sanctions against broker-dealers and executives of firms who sold private placements in two alleged Ponzi schemes. The actions were taken against Workman Securities Corp and Askar Corp for deficient investigation and due diligence associated with the sale of high risk investments.. The investments involved were Medical Capital Holdings Inc and Provident Royalties LLC who were charged with fraud by the SEC in 2009.

Continue reading "Regulators Issue Sanctions Against Brokers for Misconduct in Private Offerings (Reg D Offerings)" »

A federal judge has refused to approve a proposed class action settlement between Securities America and a class of people who purchased hundreds of millions of fraudulent securities issued by Medical Capital and Provident Royalties, that were sold by Securities America. See Dan Levine’s and Joseph Giannone’s article in Reuters captioned, “Judge rejects settlement with Ameriprise unit,” and Bruce Kelly’s InvestmentNews article, “CFO: Securities America on the brink without legal settlement.”

Continue reading "Judge Rejects Securities America's Attempts to Settle Class Actions Involving Medical Capital Notes and Provident Royalties Securities" »

Securities America, Inc., the Ameriprise Financial affiliate that sold hundreds of millions of dollars of fraudulent private placements issued by Medical Capital Corp. and Provident Royalties LLC, is trying to force a class action settlement in connection with investors who purchased Medical Capital Notes though Securities America. The proposed settlement would protect millions of dollars of its assets from defrauded investors and allow it to stay in business, according to InvestmentNews articles by Bruce Kelly entitled “Lawsuits suck air out of Securities America’s cash cushion,” and “Ameriprise reaches $27M settlement over private placements: Attorney.”

Continue reading "Ameriprise and its Securities America Affiliate Seek to Use a Legal Loophole to Avoid Hundreds of Millions of Dollars in Legal Exposure" »

National Securities Corp. is the latest broker-dealer in FINRA’s crosshairs over the sale of fraudulent private placements, according to Bruce Kelly’s InvestmentNews article titled “Finra goes after yet another B-D in private-placement crackdown.”

Continue reading "Private Offerings (a/k/a Reg D Offerings) Continue to Haunt Brokerage Firms" »

QA3 Financial Corp. will apparently join approximately twenty-four other brokerage firms that have shut down over the past twelve months. The firm announced that it will cease operations effective February 11, 2011, according to Bruce Kelly’s InvestmentNews article, “B-D down: QA3 to close up shop next week.” The announcement was made by owner and CEO Steve Wild in an email to the firms’ 400 brokers, according to the article. It is unclear as to when and how QA3 plans to inform its customers. According to InvestmentNews, Mr. Wild did not return phone calls on Thursday and Friday.

Continue reading "Brokerage Firm QA3 Will Cease Operations as a Result of Soured Private Offerings" »

According to a recent article in InvestmentNews, Securities America faces 150 or so arbitration claims seeking recovery of $90 million of investor losses associated with its sale of Medical Capital Notes. The claims are shaping up to be a significant problem for Securities America and its parent company Ameriprise Financial, Inc. On New Year’s Eve, Securities America was hit with a 1.2 million dollar award in connection with its sale of the Medical Capital Notes. The award included $734,000 in compensatory damages, $250,000 in punitive damages and $171,000 in attorney and expert fees.

Continue reading "Securities America's Medical Capital Notes "Nightmare" Continues" »

On New Year’s Eve, Securities America was hit with a $1.2 million award as a result of its sale of Medical Capital Notes. The award included $734,000 in compensatory damages, $250,000 in punitive damages and $171,000 in attorney and expert fees. According to attorney Pratt H. Davis at Page Perry, LLC, a securities arbitration and litigation firm currently handling millions of dollars of Securities America claims, “the award of punitive damages by a FINRA panel is a foreboding sign for Securities America going forward as punitive damages are rarely awarded in FINRA arbitrations.”

Continue reading "Investor in Medical Capital Notes Recovers $1.2 Million from Securities America" »

Private (Reg D) offerings, which allow companies to raise money from investors off the regulatory radar screen, are tempting to some investors in this low interest rate environment, but beware: sellers often do not disclose all the important risks associated with these investments, according to Alexis Leondis’s Bloomberg article, “Private Placements Woo Investors with ‘Nowhere to Go.’”

Continue reading "Investor Alert - Private (Reg D) Offering Abuses are on the Increase" »

The Real Estate Investment Securities Association (REISA) has drafted a proposed “best practices” guide for firms to use when they sell high-risk private placement securities, such as private notes, oil and gas deals, and real estate funds, which are also known as Reg D offerings, according to an October 19 article in InvestmentNews by Bruce Kelly (“Reg D guideline zeroes in on due diligence.” As the title says, the process of document review, checks and verifications called “due diligence” is at the heart of the proposed guideline.

Continue reading "Due Diligence Concerns Permeate Private (Reg D) Offerings" »

According to a recent article in InvestmentNews and a recently filed court exhibit, securities regulators were concerned about Medical Capital’s lack of audited financial information five years before Medical Capital Holdings Inc.'s private-placement financings imploded and wiped out $1.1 billion in investors' cash.

Continue reading "Red Flags Concerning Medical Capital Notes Existed as Early as 2004" »

In response to recent concerns over high-risk private offerings such as Medical Capital and Provident Royalties, the Financial Industry Regulatory Authority (FINRA) has issued a Notice to Members (NTM-10-22) that reminds brokerage firms of their obligations to investigate private placements before allowing their representatives to sell those investment products. However, FINRA only regulates registered broker-dealers, and many such offerings are recommended or sold by financial advisory firms that are not FINRA-registered.

Continue reading "Problems Involving Private Offerings Escalate" »

Private placement offerings (also known as Reg D offerings), such as Medical Capital Holdings Inc. and Provident Royalties LLC, have devastated unsuspecting investors. Such offerings, as well as the unscrupulous broker-dealers who pushed them, have wound up in the crosshairs of state securities regulators. See “Cracking Down on ‘Private Placement’ Investments,” March 27, 2010, Wall Street Journal, by Jane J. Kim.

Continue reading "The Hammer is Coming Down on Private Placement (Reg D) Offering Scams" »

New concerns have risen over investors being misled about the facts and risks of private placement offerings (Reg D offerings) often recommended by financial advisers in smaller towns that are outside the financial industry mainstream. While misrepresentations about high-risk private offerings are by no means limited to small towns, small town residents with nest eggs have been disproportionately victimized by unscrupulous offerings.

Continue reading "Many Investment Scams Target Small Town Investors" »

The Commonwealth of Massachusetts Securities Division recently filed a Complaint (“Complaint”) that makes some startling allegations about Securities America’s actions in selling Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.

Continue reading "Securities America Faces a New Wave of Medical Capital Problems" »

The Massachusetts Securities Division recently filed a complaint against Securities America related to its private offerings of Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.

Continue reading "Evidence Against Securities America Mounts in Medical Capital Cases" »

Private investments (also known as private placements or Reg D offerings) have been the subject of a growing number of fraud charges by the U.S. Securities and Exchange Commission and some states. Such deals, including oil and gas ventures and real estate partnerships, have historically been capitalized by sales to individual investors through independent broker-dealers. Promoters of these investments depend upon this channel to raise money and the broker dealers reap rich commissions on the private placements with loads up to 30%.

Continue reading "Reg D Offerings and Other Private Investments Expose Investors to Huge Risks" »

The Receiver for Medical Capital Holdings Inc. issued his Third Report on October 9, 2009. The most recent report did contain some additional information but was, in most part, a recap of what was included in the Second Report. The reports can be found at http://www.medicalcapitalreceivership.com. Nothing in the Third Report indicates any greater likelihood of recovery for investors directly from Medical Capital. As indicated in the reports, out of the 104 medical accounts receivable clients listed, 53 of the accounts, totaling some $542,894,528, appear to no longer exist.

Continue reading "Medical Capital Holdings Alert - Investors Face Tremendous Losses" »