First Investor Win Against Broker-Dealer for Medical Capital Notes Reported
Last summer, the SEC charged Medical Capital Holdings, Inc. and Medical
Provider Funding Corporation VI, among others, with fraud. The SEC alleged
that the companies "defrauded investors by misappropriating about
$18.5 million of investor funds and by misrepresenting to investors that
no prior offerings had defaulted on or been late in making payments to
investors of principal and/or interest," according to the July 20,
2009 SEC press release.
Central to the fraud complaint filed by the SEC was $77 million in notes sold by dozens of independent broker-dealers. Last month, Marilyn Hazell won a $400,000 FINRA arbitration claim against Peak Securities Corp. It was the first investor win in an arbitration complaint against a broker-dealer over the notes offered by Medical Provider Funding Corporation VI.
Hazell's complaint claimed breach of contract, breach of fiduciary duty, negligence and fraud on the part of Peak Securities Corp. in relation to the sale of notes offered by Medical Provider Funding Corporation VI, according to a June 6, 2010 Investment News article.
The recent win by Hazell was the first in a long series of arbitration claims related to the sale of Medical Capital notes. There are currently several class action lawsuits and many arbitration claims pending against broker-dealers for actions relating to the sale of Medical Capital notes and other private placements.