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Montana’s Commissioner of Securities announced that it filed a Notice of Proposed Agency Disciplinary Action, Case No. SEC-2010-48, against Securities America in connection with its sales of Medical Capital Notes. According to the Notice, Securities America “withheld material information regarding heightened risks” from its registered representatives and their clients concerning Medical Capital Notes. Montana’s Commissioner of Securities also alleges that Securities America “concealed these risks” from its brokers and their clients. Altogether, Medical Capital issued $2.2 billion in notes through numerous independent broker-dealers. Securities America, however, was the largest seller of Medical Capital Notes. Specifically, according to Montana’s action, Securities America was responsible for the sale of 37% of the total Medical Capital Notes nationwide since 2003, totaling $697 million.
In 2009, the Massachusetts Securities Division filed an Administrative Complaint against Securities America in connection with its sales of Medical Capital Notes. Massachusetts alleged that Securities America ignored their own due diligence analysts and sold Medical Capital Notes to unsophisticated investors without telling them about the risks involved.
Presently, KlaymanToskes is prosecuting numerous arbitration claims on behalf of aggrieved investors, to recover losses sustained in Medical Capital Notes. While class action lawsuits regarding Medical Capital Notes have been filed, KlaymanToskes reminds investors of the benefits of filing an individual securities arbitration claim, as opposed to participating in a class action lawsuit. By participating in a class action lawsuit, an investor may only recover a nominal amount. However, if one has experienced significant losses in Medical Capital Notes, it may be more beneficial for them to file an individual securities arbitration claim. In 2003, KlaymanToskes conducted a detailed study of securities arbitration versus class action. The study concluded that investors who file a securities arbitration claim traditionally obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit. To view the full results of the comparison, please click here: https://klaymantoskes.com/documents/classvr.pdf