Corporate & Securities Law

More Broker/Dealers Subpoenaed Over Medical Capital, Provident Royalties

By Steven Caruso

Six broker/dealers are in hot water with Massachusetts Secretary of State William Galvin over sales of private placements in Medical Capital Holdings and Provident Royalties LLC. Among the firms on Galvin?s hit list: QA3 Financial Corp., National Securities Corp., CapWest Securities, Independent Financial Group LLC, Investors Capital Corp. and Centaurus Financial.

Each of the firms have received subpoenas from Galvin?s office and ordered to turn over information on due-diligence efforts, suitability data and promotional materials regarding the private placements in question.

Earlier in the year, Galvin filed fraud charges against another broker/dealer, Securities America, on allegations that its reps misled investors about investments in Medical Capital.

According to the complaint, Securities America marketed Medical Capital notes for several years through seminars and other marketing tactics, allegedly selling private placements even after a senior-level officer expressed concerns about the financial health of Medical Capital.

Securities America was one of the biggest sellers of Medical Capital notes. From 2003 through 2009, it sold nearly $700 million in Medical Capital investments. That comes to 37% percent of the $1.7 billion in notes that Medical Capital issued.

Full post as published by Representing Investors on March 22, 2010 (boomark / email).