The Massachusetts Securities Division recently filed a complaint against Securities America related to its private offerings of Medical Capital Notes. The collapse of the Medical Capital investments has left investors nationwide in the hole to the tune of about $1 billion.
A review of the Complaint indicates there appears to be some very damaging evidence against Securities America related to their liability for selling millions of dollars of the Medical Capital Notes. According to the Complaint, Securities America, throughout the course of selling these notes, had a due diligence committee which hired a third party to prepare due diligence reports on the Medical Capital Investments. According to the allegations in the Complaint, the due diligence reports prepared by the third party raised several significant issues and concerns related to the Medical Capital offerings.
According to allegations and emails set forth in the Complaint, the due diligence committee ignored the repeated warnings that they received from the outside due diligence reports. The Complaint alleges that Securities America made a deliberate decision to not identify these risks to investors and provide them with certain disclosures that were recommended by the due diligence reports.
From the evidence in the Massachusetts Complaint and other documents, it appears that Securities America not only mislead investors but also intentionally made material misrepresentations and omissions to investors in order to get them to purchase these Medical Capital Notes. According to Pratt H. Davis of Page Perry, “it appears that Securities America not only turned a blind eye to the red flags and significant warnings in the due diligence reports, but also took specific actions to mislead the investors into believing such risks did not exist.” Davis’ partner, J. Boyd Page, noted “we’re seeing a lot of this kind of problem in cases arising out of private (Reg D) offerings. Investors need to be very careful about these types of offerings.”
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and corporate investors in auction-rate securities cases. For further information, please contact us.