Posted in: FINRA | Arbitrations | Ponzi Schemes | SEC | Greedy Brokers | Risky Investments | Medical Capital Notes |
Last month a lawsuit was filed against Securities America Inc., the leading seller of private holdings in Medical Capital. According to the complaint filed by the Massachusetts Securities Division, which is the state’s largest financial regulator, 400 Securities America advisors sold $700 million in the private securities, about half of which are now in default.
To make matters worse for the firm, FINRA are now releasing the names of individual advisers who have been sued in arbitration complaints stemming from Medical Capital notes.
From an article in InvestmentNews, which can be viewed in its entirety here:
According to records with the Financial Industry Regulatory Authority Inc., those advisers include William Glubiak, who was named in December in a $7.7 million complaint from about 24 households of investors. The suits claim that Mr. Glubiak sold clients investments in Medical Capital Holdings Inc. and also alleges unsuitability, misrepresentation and omission of material facts, according to the Finra records.
Mr. Glubiak, who is the founding principal of Cedar Brook Financial Partners LLC, which has 60 brokers and staff, said that he and his firm had “no knowledge of any fraud” regarding Medical Capital. “We are very strong in our opinion we didn’t” do anything wrong, he said.
Paula Dorion-Gray, another top adviser for Securities America, also has been sued over private placements gone bad. Ms. Dorion-Gray was named in a $254,000 complaint in November alleging she recommended alternative investments in Medical Capital and another private placement, Provident Royalties LLC, according to Finra records. In 2007, Ms. Dorion-Gray was named as one of America’s top 100 independent advisers by Registered Rep. magazine.
Securities America CEO Steve McWhorter plans on retiring this spring after 22 years leading the broker-dealer firm. In his announcement, which came after the most-recent Medical Capital notes lawsuit, McWhorter said he was retiring to spend time with his family, and “he stressed that there was no other component to the decision.”
The SEC believes Medical Capital Holdings Inc. has raised more than $2.2 billion since 2003 through the sale of private securities, or private holdings. After defaulting on nearly $1 billion of these holdings, investors began initiating claims against brokerages that sold Medical Capital Notes. According to the Wall Street Journal, this list includes Capital Financial Services and QA3 Financial Group.
The trouble surely isn’t over for Securities America, a firm owned by Ameriprise Financial Inc., since likely there will be many additional related arbitration complaints. In Massachusetts alone, the broker-dealer sold Medical Capital notes to 60 investors.
Arbitration claims related to private securities increased in 2009, following the collapse of Medical Capital. A separate charge was filed against Provident Asset alleging the fraudulent sale of oil and natural gas private securities.
If you were sold Medical Capital notes, or if your portfolio was affected by the improper sale of private holdings, you must act quickly. Contact one of our attorneys to set up a consultation, because we may be able to recover on your lost investment.
