SEC Receiver Seeks to Deny Recovery to Many Medical Capital Investors


In connection with the Medical Capital receivership, the SEC Receiver recently filed its “Proposed Plan for Distribution” (the “Plan”). Unfortunately, the Plan contains some disturbing news for those investors who were pro-active and obtained recoveries against third-parties through litigation (including class actions) or arbitration.

As proposed in the Plan (set forth on Page 14 section 4), the Receiver would deduct any funds anyone received from third-parties in arbitration or litigation dollar for dollar against any sums that would be due from the Receiver.

What this means is anyone who received any kind of recovery in arbitration or litigation from third-parties will receive nothing from the Receiver’s fund. As an example, if an investor had a $100,000 note and had received $10,000 in interest (meaning the investor had a $90,000 claim) and the payout was 10% , that investor would normally receive $9,000. Under the Receiver’s plan, however, if the investor received $9,000 or more from another source, that investor would receive nothing from the Receiver.

According to attorney Pratt H. Davis at Page Perry, a securities arbitration and litigation firm, “third-party recoveries are usually just netted out of the total claim in the same manner as any interest received on the investment. Dollar for dollar set-offs are rarely used.” According to Mr. Davis, “the money individuals have collected from third-parties should not foreclose any recovery from the Receiver’s fund. The Receiver’s Proposed Plan penalizes those individuals who were pro-active to seek legal action to recover their losses and sends a message that by doing nothing an investor is better off in terms of the recovery he or she receives from the SEC.”

If you have received funds from third-party sources related to investments in Medical Capital and disagree with the SEC Receiver’s Proposed Plan, please contact Page Perry at 770-673-0047.

Page Perry is an Atlanta-based law firm with over 170 years collective experience protecting investor rights and fighting Wall Street greed.