untrue statements of material fact and omitted other material facts concerning the use to which investor funds would be put.
Coral Gables (Vocus) October 3, 2009
The Law Firm of Tramont Guerra & Nunez, PA (TGN) makes an announcement to all investors in Medical Capital Holdings, Inc. (“MCH”) concerning the class action lawsuit (Case No. 09-cv-1084) filed on September 18, 2009, in the United States District Court, Central District of California. The class action lawsuit was filed on behalf of investors in the five Special Purpose Corporations, MP II, MP III, MP IV, MP V, and MP VI, (“SPCs”) created by MCH to raise capital through the offering of promissory notes. The class action names Securities America, Inc. among others, as a defendant, and alleges violations of Sections 12(a)(1) and 12(a)(2) of the Securities Act of 1933 (“the Act”). In selling unregistered MCH securities, the defendants were required by the Act to sell only to accredited investors. As it pertains to natural persons, an accredited investor has been defined as: (a) a person with an individual net worth, or joint net worth with his or her spouse, of over $1 million at the time of purchase, or (b) a person whose individual income exceeds $200,000, or $300,000, jointly with his or her spouse, in the two years prior to the purchase at issue, together with a reasonable expectation of current income levels at the time of purchase. The first count of the class action alleges that Securities America, and others, violated the Act by selling an unregistered MCH security to non-accredited investors. In support thereof, the class action alleges that defendants were responsible for the distribution of MCH literature to the general public and the solicitation of various unaccredited investors, via invitational information sessions.
Count two of the class action alleges a violation of Section 12(a)(2). The alleged violation was due to the fact that the Private Placement Memorandums (“PPMs”), which the lawsuit alleges constituted a prospectus within the meaning of Section 12 of the Securities Act, contained, among other things, “untrue statements of material fact and omitted other material facts concerning the use to which investor funds would be put.” This information, according to the class action, was essential to make the statements in the PPMs not misleading. In connection with the second count, the class action asserts the defendant’s owed the Plaintiffs the duty to make a “reasonable and diligent” inquiry to ascertain whether the information contained in the PPMs was accurate.
Investors should consider whether an individual securities arbitration claim filed with the Financial Industry Regulatory Authority (FINRA) is a more effective method (than a class action) to recover their investment losses. The brokerage firms who distributed the securities issued by MCH and its affiliated entities were obligated to conduct due diligence of facts concerning the risks associated with the investments. Financial advisors told many investors that these securities were suitable for current income investment objectives. Brokerage firms are obligated to give, and investors are entitled to rely upon brokerage firms for, competent, suitable investment advice in accordance with FINRA Rules and Regulations. Recommendations of unsuitable investments and/or failure to conduct adequate due diligence are both causes of action that form the basis for individual securities arbitration claims filed with FINRA.
The Securities Law Firm of Tramont Guerra & Nunez, PA, is a nationally recognized, Martindale Hubbell “AV” rated securities law firm. To request a confidential consultation from a TGN attorney to assist you in determining whether you have a viable individual claim for investment losses that exceed $100,000 from a full service brokerage account, contact us on our website. To speak directly with an attorney, call (800) 578-0137 and ask for Benjamin Fernandez, Esquire.