Gross Misconduct
Evidence of Securities America Gross Misconduct
The State of Massachusetts recently sued Securities America, Inc., accusing the brokerage firm of securities fraud and gross misconduct when it recommended and sold hundreds of millions of dollars of Medical Capital notes to investors. The Massachusetts lawsuit accuses Securities America of failing to disclose red flags, warning signs, and material risks about Medical Capital to investors. Those claims are much the same as the arbitration claims and lawsuits that Dimond Kaplan & Rothstein, P.A. filed on behalf of numerous Medical Capital investors many months ago.
Documentation reflects that Securities America was aware of, but ignored, serious red flags about the Medical Capital fraud. The documents also reflect that Securities America covered up the problems, kept the warning signs from its own brokers, and consciously chose not to alert Medical Capital investors of the red flags. Lawyers filing Medical Capital lawsuits or Medical Capital arbitration claims will be able to use these documents as key evidence against Securities America and possibly other brokerage firms.
Documents also reveal that Securities America ignored its own President’s concerns that Medical Capital did not have audited financial statements. Securities America’s President told Securities’ America’s Senior Vice President and Chair of Securities America’s Due Diligence Committee that the lack of audited financial statements was a “big concern” and that Securities America should not sell any more Medical Capital notes if Medical Capital did not have its financials audited. But Securities America ignored its own President and did not require Medical Capital to have its financials audited. Rather, Securities America proceeded to sell hundreds of millions of dollars more of Medical Capital notes to investors without the benefit of audited financial statements. An audit or even a thorough review of Medical Capital’s records would have revealed the Ponzi scheme and Securities America and other brokerage firms would not have sold Medical Capital notes to any investors.
