Archive for April, 2011

MEDICAL CAPITAL INVESTOR AWARDED $400,000 BY FINRA ARBITRATOR

April 29th, 2011
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In 2010 Peak Securities, a brokerage house that promoted and sold Medical Capital securities, was found guilty of fraud, negligence, breach of contract, and breach of fiduciary duty by a Financial Industry Regulatory Authority (FINRA) mediator. In this award against brokers selling fraudulent Medical Capital investments, an investor who experienced financial loss due to Medical Capital securities received a $400,000.00 award.

 

Hundreds of investors who bought fraudulent Medical Capital notes through brokerage firms have filed arbitration claims against those firms.  And in our opinion, this judgment for a Medical Capital investor will be the first of many.

The SEC exposes Medical Capital fraud.

The heart of a 2010 Securities and Exchange Commission (SEC) complaint concerning investment fraud focused on Medical Capital.

Medical Capital professed to supply financial backing to providers of healthcare. According to company execs, they bought the accounts receivables of these providers and made loans to them. The accounts receivables were supposedly sold as notes to investors via private placements, also known as Regulation D offerings.

But it appears to have been a Ponzi scheme.

Medical Capital spent millions of investor dollars on administrative costs. Executives also spent millions on a Hollywood film, a yacht, and other extravagant items. And they failed to make interest and principal payments in a timely manner. They even pretended that no previous notes had been defaulted on.

But that’s not all.

According to the SEC receiver, hundreds of millions in medical receivables that had been packaged as Regulation D offerings were either overvalued or fictional. That’s right! Some had never even existed.

It’s been estimated that 20,000 investors bought $2.2 billion worth of Medical Capital notes, approximately $1 billion of which are in default. And that means massive losses for investors.

Comparable cases are pending.

In early 2010, another brokerage firm dealing in Medical Capital notes was sued, this time by the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth. According to the lawsuit, Securities America, Inc. committed wide scale fraud–hundreds of millions of dollars worth of it—by marketing Medical Capital notes. The state alleges that the firm not only failed to perform with due diligence, but it also failed to disclose obvious risks to its investors, despite the urgings of its own president and a third party.

At Carlson Law, we believe that the arbitration award against Peak Securities foreshadows future arbitration awards against Securities America and the other brokerage firms that sold Medical Capital as well as other fraudulent and/or high-risk private placements such as Provident and DBSI.  For further questions and information, contact our securities fraud attorney in San Diego today.

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Posted in Broker Fraud, Investment Fraud, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud | Comments (15)

Trusting Your Financial Advisor – Do You Really Know Who is Handling Your Life Savings?

April 15th, 2011

There are over 210 possible different credentials available to financial advisors.  Very few of those credentials are regulated and some mean little or nothing.  It is important for every investor to do their homework and really get to know their financial advisor, their credentials, licensing and experience.  Simply because your advisor has many credentials or friends have recommended them is not enough.

While the CFP (Certified Financial Planner) and CFA (Certified Financial Advisor) designations require course work, exams and continuing education many certifications in the financial industry do not.   So what should an investor do in order to select a financial advisor? There are a number of things that can be done.

  1. Everyone can go and look up the record of the advisor they are considering using on the Financial Industry Regulatory Authority’s BrokerCheck service.  The BrokerCheck service will give you important information about the advisor you are considering; such as if that advisor has had prior complaints, been sued before, where he or she has worked in the past and for how long,  the reason they left a prior employer, in addition to information about licensing and credentials.
  2. Next, look at the information from state securities regulators at the North American Securities Administrators Association.
  3. Also, review the National Association of Insurance Commissioners website regarding the advisor you are considering using.

A good question to ask a prospective advisor regarding their credentials is what percentage of people who apply for the credential obtain it?  Also, feel free to ask about the qualifications of the instructors for the credential program touted.  As an investor interviewing a financial advisor, you should be careful if the advisor is put off or unable to answer such simple questions.

If you have already fallen victim to an unqualified investment advisor and suspect an incidence of investment fraud, please call the Carlson Law Firm at (619) 544-9300 or contact a San Diego securities fraud attorney today.

 

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (11)