Recent news that the SEC has charged Medical Capital Holdings Inc. and Provident Asset Management, LLC with fraud related to large private-securities deals could mean serious problems for broker-dealers who sold the products to investors.
On July 16, the SEC charged Medical Capital Holdings Inc. with fraud related to the sale of $77 million of private securities in the form of notes. Just a week earlier, the SEC charged Provident Asset Management, LLC with operating a Ponzi scheme in the sale of $485 million of preferred stock and limited partnership offerings in oil and gas deals.
According to an article in Investment News, shortly after the charges were filed against Medical Capital Holdings Inc, FINRA, the financial regulatory agency, began turning up the pressure on firms that sold the Medical Capital Holding offering, called the Medical Provider Funding VI, by issuing a “sweep” letter to firms who sold the offering with the purpose of getting information about the clients who were sold the securities.
According to the article, firms that sold either one or both of the investments include American Portfolios Financial Services Inc., Capwest Securities Inc., GunnAllen Financial Inc., J.P. Turner & Co. LLC, National Securities Corp., Next Financial Group Inc. and Securities America Inc.
According to Pratt H. Davis, an attorney with Page Perry, brokerage firms who sold these offerings “could face liability on several fronts for selling the alleged fraudulent securities” and that “the firms selling these securities had a duty of due diligence to determine that the offerings, were in fact, what they were represented to be.”
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 securities cases. For further information, please contact us.