TAG | Medical Capital notes
Soreide Law Group, PLLC, wants to speak with you about your Capital Financial private-placement investments. Call 888-760-6552. Recently, it has been reported that Capital Financial Services Inc., with 332 representatives, sold Provident Royalties LLC, preferred stock from 2006 to 2009, according to an SEC cease-and-desist order. Capital Financial brokers also sold $63 million of the offerings by Provident, which the SEC charged with fraud in 2009. The reps received an 8% commission — or $5 million — for selling the Provident deals. The firm collected a 1% due diligence fee, or $600,000. Capital Financial also sold $100 million of private placements for Medical Capital Holdings Inc. Medical Capital has also been charged with fraud.
“Capital Financial never conducted independent verification of any of the offering materials provided by Provident,” the SEC stated in its order, which it issued April 6.
The broker-dealer “also never received audited or even unaudited financial statements for any of the Provident offerings,” the SEC said. “The only financial information Capital Financial received regarding Provident was an unaudited consolidated balance sheet review.”
“Capital Financial failed to disclose to customers that although it was collecting a due diligence fee, it was not conducting any due diligence,” the SEC order stated. When in fact, the firm collected the $600,000 as a due diligence fee but incurred no expenses to match the fee, the SEC alleged. “At no time did Capital Financial hire independent counsel, an accounting firm, contact third parties regarding Provident’s business, or hire consultants to review the Provident offerings,” the SEC alleged.
If you bought private placements, including but not limited to, Provident Royalties LLC, Medical Capital Holdings, Inc., or Capital Financial Services, Inc., Attorney Lars Soreide, of Soreide Law Group, PLLC, would like you call a Securities Arbitration Lawyer for a free consultation on how to recover your investment losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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On New Years’ Eve, Securities America Inc. was dealt a costly legal blow when a Finra arbitration panel awarded almost $1.2 million in damages and legal fees to a client who sued the firm and a broker over the sale of private placements that regulators have alleged were fraudulent.
The award, from three Financial Industry Regulatory Authority Inc. arbitrators, included compensatory damages of $734,000 and punitive damages of $250,000, plus attorney and expert witness fees of $171,000. The claimant, Josephine Wayman, also sued Randall Ray Talbott, a Newport Beach, Calif.-based rep, who is also liable for the award, according to the arbitrators’ decision, which was filed with Finra Dec. 31.
It is uncommon for punitive damages in Finra arbitration awards.
“This is a powerful win for the claimants,” said a plaintiff’s attorney who represents more than 100 clients in similar arbitration claims seeking more than $35 million in damages against Securities America. The punitive damages in this award shows that the three arbitrators were “shocked” by Securities America’s action involving Medical Capital notes, he said.
After checking his profile on Finra’s BrokerCheck system, Mr. Talbott has 11 other pending customer disputes involving the sale of Medical Capital notes, but he is not named as a defendant in many of the arbitration cases. When asked about the award, Mr. Talbott said, “I don’t know anything about it.” He added that the matter was “very unfortunate.”
Securities America has tried to pin blame for the losses on Medical Capital Holdings Inc., the issuer of the private placements.
Securities America could be on the hook for millions of dollars more in legal damages involving the sale of private placements before the market collapse of 2008. The securities divisions of Massachusetts and Montana are also suing the firm.
“If there’s a problem here, Medical Capital is to blame, not Securities America,” Bruce Bettigole, a partner at Sutherland Asbill & Brennan LLP who is serving as lead attorney for the broker-dealer, said during a September hearing with before Massachusetts Securities Division.
In November, Jim Nagengast, the firm’s CEO said, “We feel very strongly we did industry-leading due diligence and are vigorously defending” the firm and its advisers.
This particular arbitration award appears to be the first involving Securities America’s sale of private placements issued by Medical Capital, which the Securities and Exchange Commission charged with fraud in 2009. Dozens of independent broker-dealers sold private Medical Capital notes, which raised $2.2 billion from 2003 to 2008. Securities America was by far the biggest seller of the Medical Capital product, with 400 brokers selling almost $700 million of notes. Medical Capital is in bankruptcy, and the receiver estimated that about half of investors’ money, $1.1 billion, is gone.
It was noted that a spokesman for Ameriprise, said the firm had no comment.
As is common in Finra arbitration awards, the decision gives no reasoning for the award. However, the arbitrators did offer comments about their decision, a point of great interest to other clients suing Securities America.
Securities America, with about 1,900 reps and advisers, is owned by Ameriprise Financial Inc., one of the largest retail brokerage firms in the country. “The award was based on the specific facts of this investor’s case, and we disagree with the outcome,” wrote Janine Wertheim, a company spokeswoman, in an e-mail. “Securities America does not believe it acted inappropriately in the sale of these investments.”
“The panel’s decision is based on what was actually known by Randall Talbott and Securities America Inc. at the relevant times and is not based on what additional information could or could not have been discovered by respondents regarding the subject investments or the company offering the investments,” according to the award. “The decision is based on what was actually known by Randall Talbott and Securities America Inc. at the relevant times.”
This information was obtained from Investment News’ website in an article by Bruce Kelly.
If you feel you have been a victim of these alleged fraudulent schemes of Securities America, Inc., Randall Ray Talbott, Ameriprise Financial, Inc., or Medical Capital Holdings, Inc., call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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