Bny Mellon and Wells Fargo File Suit Over Reg D Offerings

BNY Mellon and Wells Fargo, who were both trustees for Medical Capital Holdings, have filed suit against Securities America other independent broker dealers that peddled private placement offerings of Medical Capital Holdings, Inc., according to Bloomberg. The lawsuits claimed that the broker dealers breached their obligation to MedCap investors by selling the private placements to investors for whom they were not suitable and failing to disclose the risks of the notes. Securities America was by far the largest seller of the notes selling some $700 million of the $2.2 billion raised. Securities America is up for sale by its parent company, Ameriprise. Out of the 12 other firms sued, 7 have shut down operations in 2009 and 2010.

This marks the third time in the last year or so that outside parties such as trustees have filed suit against independent broker dealers that peddled private placements. In related matters, the trustee overseeing the receivership of Provident Royalties LLC filed suit against some 50 independent broker dealers in an attempt to recover $285 million, including commissions. Also, the bankruptcy trustee for DBSI Incorporated, which packaged real estate that went bust, filed suit against some 100 broker dealers trying to recover roughly $49 million.

Contact Us
Free Consultation: (800) 259-9010