by Brian Mahany
An arbitration panel has ruled that United Securities Alliance Inc is liable to several investors in a case alleging fraud, misrepresentation, negligence and breach of fiduciary duty. The charges stem from investments in several securities including DBSI State Office Fund and Medical Capital Corporation.DBSI filed for bankruptcy in 2008 and Medical Capital was one of the largest Ponzi schemes in California history.
Broker dealers and the stockbrokers in their employ are responsible to make suitable investment recommendations to customers. Although stockbrokers generally do not have a fiduciary relationship with their customers, they do have the obligation to perform some due diligence on what they recommend and sell to their clients. The investment recommendations must also be suitable.
What makes this case troubling is that United Securities did not even bother showing for the arbitration hearing. They lost by default. According to FINRA records, they simply shut their doors.Brokers dealers such as United are regulated by the Financial Industry Regulatory Authority or FINRA. Member firms are required to submit cases to arbitration.
Will the victims collect their money? That remains to be seen. Most stockbrokers carry errors and omissions insurance and the principals behind United may also be liable.At the height of its existence United claimed having 285 stockbrokers.
The collapse of Medical Capital left several brokers bankrupt in its wake. That’s little consolidation for their customers who lost their investments.
According to Domain Market, the UnitedSecuritiesAlliance.com domain name is available for $1000. With its checkered past, who would want it?
If you lose money in a Ponzi scheme or fraud or simply get horrible advice from a stockbroker, don’t wait. It appears from public records that the investors in this case waited until two years after United closed its doors to file their claim.While they may have won a large award, collecting the judgment could be difficult.
Mahany & Ertl is a boutique law firm that concentrates on fraud and asset recovery and collection of unpaid judgments. Stockbroker fraud, investment fraud, Ponzi schemes and dishonest insurance companies and salespeople? We can help. Call Brian Mahany for a confidential, no obligation consultation. Brian can be reached at (414) 704-6731 (direct) or at
Mahany & Ertl, LLC – Fraud, Asset Recovery, Tax Resolution and White Collar Criminal Lawyers. Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services nationwide.