The title of this post sounds rather boring – unless you are one of the tens of thousands of Americans burned by private placement scams. Ponzi schemes and fraud have been with us since the beginning of time. As much as we stress prevention and due diligence on this website, unfortunately bad people will continue to victimize good people.
Many of the scams out there are promoted directly by the fraudsters. These are tough from an asset recovery standpoint since the money is often long gone by the time we get the call. Purchasing from a stockbroker gives us (and therefore you) an additional deep pocket to pursue.
Theoretically, brokers shouldn’t be the subject of many private placement abuses and Ponzi scheme lawsuits. Because they are financial professionals, they have the training to ferret out bad investment deals. As licensed securities dealers, they also have a legal obligation to perform some due diligence before recommending these “deals” to clients.
Unfortunately, many of these brokers are more interested in profit and leave the due diligence to a third party, or worse, rely on the promoter (fraudster) for the due diligence research!
Recently, the Financial Industry Regulatory Authority (FINRA) took action against several brokerage firms. Last week FINRA announced sanctions against Securities America, Next Financial Group, Equity Services Inc, National Securities Corp., Newbridge Securities, Garden State Securities, Capital Financial Services and Investors Capital Corp. FINRA says these firms sold tens of millions of dollars in private placements in Medical Capital Holdings and Provident Royalties. Both companies were scams according to the SEC.
Not only are these firms responsible for the fines, they may be responsible for the losses suffered by their clients. In April In April, Ameriprise Financial Inc and its former brokerage unit, Securities America Inc, agreed to pay about $150 million to clients who lost about $400 million on the securities that turned out to be frauds.
Despite much higher losses, Securities America got away with paying 37¢ on the dollar because Ameriprise was ready to just walk away. Although Securities America is a subsidiary of Ameriprise, the parent Ameriprise was not legally on the hook for its subsidiary debt.
The Provident and Med Cap losses were so high that several brokerage firms that sold these investments have gone out of business.
Based on our investigation, we believe the following brokerage firms collapsed in 2010 or 2011 because of Provident Royalties:
- Workman Securities Corp. – October 2011
United Equity Securities LLC – October 2011
Boogie Investment Group Inc. – September 2011
WFP Securities Corp. – August 2011
Investlinc Securities LLC/Meadowbrook Securities LLC – August 2011
CapWest Securities Inc. – July 2011
Securities Network LLC – May 2011
Harrison Douglas Inc. – May2011
Matheson Securities LLC – March 2011
QA3 Financial Corp. – February 2011
Okoboji Financial Services Inc. – July 2010
Private Asset Group Inc. – June 2010
Jesup & Lamont Securities Corp.- June 2010
GunnAllen Financial Inc. – April 2010
Main Street Securities LLC – March 2010
Community Banker Securities LLC – December 2009
E-Planning Securities Inc. – April 2009
Empire Financial Group Inc. – March 2009
Barron Moore Inc. – July 2008
If you are considering investing in a private placement, make sure the firm you are purchasing through is well capitalized. Many small “fly-by-night” brokerage firms are just one arbitration away from closing their doors. You should also check to see if they have insurance.
If you lose money on a private placement or any other type of investment, time is critical in seeking recovery. Even if you purchased from a broker, don’t waste any time. The longer you wait the less assets may be available for recovery. As noted from the list above, many small brokerage housed simply go under when losses exceed insurance or insurance.
If you are the victim of an investment fraud, call us. Our stockbroker fraud and asset recovery lawyers have helped many people get back their hard earned money. Want more information? Contact attorney Brian Mahany online, by email , or by phone at (202) 800-9791. We accept cases in all fifty states. Our services are offered on a contingency fee basis.
Mahany Law – America’s Stockbroker Fraud Lawyers. Lawyers and offices in Milwaukee, Wisconsin; Detroit, Michigan; Tampa, Florida; San Antonio, Texas and Washington, DC. Services available nationwide.