Corporate & Securities Law

Did Securities America Hide Risks From Investors?

By Steven Caruso

The state of Massachusetts apparently thinks so. Secretary of State William Galvin filed charges against Securities America on Jan. 26, accusing the broker/dealer of keeping investors in the dark about the risks of nearly $700 million in private placement securities issued by Medical Capital Holdings. 

Medical Capital, which raises money from investors and then provides loans to hospitals and other healthcare-related entities, is the same company that the Securities and Exchange Commission (SEC) sued in July for allegedly defrauding investors. In its complaint, the SEC says Medical Capital misappropriated $18.5 million of investors? money, as well misrepresented its own business record by keeping several defaults under wraps.

As it turns out, Securities America was a big seller of Medical Capital notes. According the Massachusetts complaint, Medical Capital issued more than $1.7 billion in notes from 2003 through 2009. Securities America placed $697 million of that amount. In return, Securities America pocketed more than $26 million in compensation.

?People invested their life savings, while this dealer hid from them the truth of what they were getting into,? said Galvin in a statement.

Securities America denies the charges.

Coincidentally, the Massachusetts complaint was filed four days after Steve McWhorter, Securities America?s CEO, announced his retirement from the company. 

In October 2009, Securities America was sued by Ilene Grossbard of Sarasota, Florida, over allegations that the broker/dealer failed to warn her and other investors about what she says was a multibillion-dollar Ponzi scheme involving Medical Capital notes. The parent company of Securities America, Ameriprise Financial, was named in that lawsuit, as well.

If you suffered investment losses from Medical Capital notes sold by Securities America, please contact us. A member of our securities fraud team will evaluate your situation to determine if you have a viable claim for recovery.

Full post as published by Representing Investors on January 28, 2010 (boomark / email).