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Archive for the ‘Medical Capital’ Category

Securities America CEO Steps Down Amid Growing Arbitration Claims

Last week Securities America CEO Steve McWhorter announced his decision to retire after 22 years of service. His stated reason for leaving is that he wishes to spend time with his family, and he has stressed that there is no underlying reason for his departure. Despite this, some are questioning the timing of his announcement as a spate of client arbitration claims hit the Financial Industry Regulatory Authority (FINRA).

This string of complaints stem from multiple Securities America products ranging from the now defunct Medical Capital Holdings Inc., to Tenants In Common (TIC) products that have failed. Medical Capital is perhaps the most flagrant managerial failure for Securities America as a court appointed receiver has demonstrated overt fraud in court filings on the part of the medical receivables company. Clients of Securities America have lost millions as a result of this and other product failures.

Despite these recent failures, McWhorter is praised for the growth of Securities America during his time there. He is expected to remain in his current position until a willing replacement is found, and given the great deal of disgruntled clients and scrutinizing regulators, he may be waiting quite some time.


New Suit Alleges Securities America Sold Notes it Knew to be Questionable

In a recently filed lawsuit, Securities America Inc. is charged with continuing to sell offerings of a faulty private placement after an executive at the firm sounded the alarm bell concerning the problem investment last year.

In addition to this allegation, the lawsuit further charges that Securities America sold millions of dollars’ worth of notes of Medical Capital Holdings, Inc. In July, the SEC charged Medical Capital with fraud in the sale of $77 million of private securities in the form of notes. Since that time, a court-appointed receiver has questioned the value of the company’s assets, throwing into question the structure of the six deals it sold from 2003 to 2008.

W. Thomas Cross, an executive at Securities America, wrote to a Medical Capital official that he feared a run on the bank because of issues at Medical Capital. Allegedly, this written comment was made months before Securities America ceased selling the now infamous private placement.

An official with Securities America said the claim that the company continued selling Medical Capital notes after Mr. Cross’ raised concerns is preposterous.
In total, Medical Capital raised $2.2 billion from investors. Given the legal circumstances surrounding Medical Capital Holdings Inc, this is undoubtedly only the beginning salvo of lawsuits brought about by defrauded investors.

FINRA Arbitration Filed Against Securities America

Aidikoff, Uhl & Bakhtiari (www.securitiesarbitration.com) announces the filing of a FINRA arbitration claim against Securities America on behalf of investors in Medical Capital securities.

The law firm has been contacted by investors and is preparing to file additional FINRA arbitration claims against broker dealers for losses incurred based on the recommendation to purchase Medical Capital securities.

The individual brokers and individual advisors who sold Medical Capital are not targets of investor claims.

“Investors should be aware of a pending class action, said attorney David S. Harrison. “The class case may have certain pitfalls that investors should be aware of in selecting an attorney. Most individual investors will fare better by pursuing an individual FINRA arbitration.”

Medical Capital Corporation and Medical Provider Funding Corporation VI raised more than $2.2 billion through the offering of notes in Medical Provider Funding Corp VI and earlier special purpose entity offerings.

On August 3, 2009 the Securities and Exchange Commission (SEC) sought emergency relief. The SEC has alleged that investors were defrauded among other things, by Medical Capital’s misappropriation of approximately $18.5 million of the $76.9 million raised through the sale of MP VI notes to pay administrative fees to MCC.

“Often the most important choice an investor makes following a disaster like Medical Capital is the remedy they will pursue to vindicate their rights,” said attorney Ryan K. Bakhtiari. “Investors should carefully consider their options.”

Important Facts to Consider Prior to Joining a Medical Capital Class Action

— Many investors may have viable claims based on the investments
unsuitability. Because a suitability claim is dependent on an
individual’s circumstances, this claim cannot be prosecuted on a
class wide basis.
— Investors with significant losses are unlikely ever to be made
whole in a class action.
— Class actions sometimes create hurdles to recovery for individual
investors including depositions and motion practice which are
generally not permitted in securities arbitrations decided before
FINRA. The FINRA arbitration process can usually be completed in a
much shorter period of time, often 15 months. Recovery through a
class action may take several years.
Aidikoff, Uhl & Bakhtiari represents retail and institutional investors around the world in securities arbitration and litigation matters.

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