October 12, 2010
Bernstein Liebhard LLP is investigating allegations that Securities America Inc. (“Securities America”) fraudulently sold approximately $700 million of private placement notes through Medical Capital Inc. (“Medical Capital”) from 2003-2008, causing investors to lose more than $1 billion.
Medical Capital is a California lender that issued private placements to purchase medical receivables. Securities America, the independent broker-dealer arm of Ameriprise Financial Inc., was one of the biggest distributors of Medical Capital notes, raising approximately $700 million in capital through the sale of the notes.
In July 2009, the Securities and Exchange Commission (the “SEC”) charged Medical Capital and two of its executives with securities fraud. Although Medical Capital (with the help of Securities America) raised $2.2 billion between 2003 and 2008, the company is now in receivership.
State regulators have also taken action. In January 2010, the State of Massachusetts brought a claim against Securities America, alleging that the firm and its executives withheld material information from advisers and investors regarding the heightened risks associated with Medical Capital notes. Montana regulators followed, filing a similar lawsuit in the August 2010.
Both actions allege that Securities America failed to disclose potential red flags concerning Medical Capital notes, including those raised by a due-diligence analyst at Securities Capital concerning the lack of audited financials for the offerings. In addition, the regulatory lawsuits allege that Securities America brokers sold the notes to “non-accredited” investors – investors with a net worth of less than $1 million.
In September 2010, a class action was filed against Securities America concerning Medical Capital notes. Potential class members who purchased Medical Capital notes through Securities America should consider whether they want to participate in the class action or file an individual securities arbitration claim.
If you purchased more than $750,000 worth of Medical Capital Notes from a broker/dealer and wish to discuss your potential rights for recovery through securities arbitration, please contact Jeffrey M. Haber, Esq. at (877) 779-1414 or Haber@bernlieb.com.
Bernstein Liebhard LLP, established in 1993, represents institutional and individual investors in securities arbitration, shareholder, class and derivative litigation and plaintiffs in various types of complex litigation. The firm has been named to The National Law Journal’s “Plaintiffs’ Hot List” for the past eight consecutive years. For more information concerning the firm’s Securities Arbitration Practice, please visit the Securities Arbitration Practice Group page.