Securities America Scores Legal Victory in Reg D Case

It seems like Securities America just keeps on trying to add insult to injury for investors who were sold their allegedly bogus Regulation D private placements. Judge W. Royal Furgeson, Jr. of the U.S. District Court for the Northern District of Texas halted three upcoming FINRA arbitrations and combined them with two class actions, as reported in Investment News. He ordered Securities America to establish a $21million settlement fund for investors suing the firm in those class actions for the sale of private placement notes from Medical Capital Holdings and Provident Royalties. The SEC charged Medical Capital and Provident with fraud in 2009.

Securities America, with some 1,900 representatives, is the largest independent broker dealer that sold Medical Capital and Provident notes. They were facing roughly 150 FINRA arbitration claims over the next year or so and a FINRA arbitration panel had issued an award against them in December 2010 for $1.2 million in compensatory damages resulting from the sale of the private placements. Securities America argues that it does not have enough money to pay all of the investors who have arbitration claims against them, even though the firm has reported that it generated close to $500 million in fees and commissions last year. Their argument is disingenuous and the class action settlement will result in investors receiving far less than they could have in an individual arbitration.

If you have suffered losses from investing in private placement offerings, please contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.

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