January 2010 Archives

January 30, 2010

IMH Secured Loan Fund Securities Lawsuit Alert

The Alcala Law Firm was recently contacted by several California investors who invested in the IMH Secured Loan Fund, LLC, a private placement managed by Scottsdale based Investors Mortgage Holdings, Inc. The Financial advisors who sold the IMH Secured Loan Fund to these investors also sold them other private placements, including Medical Capital and Provident Asset Management, two speculative investments that turned out to be ponzi schemes and are now the subject of numerous securities fraud lawsuits.

Before recommending any investment, particularly risky and speculative private placements, financial advisors have a fiduciary duty to adequately disclose the risks involved and also to exercise due diligence in determining whether such investments are suitable for the customer. The Alcala Law Firm is in the process of investigating the possibility of filing securities arbitration claims before the Financial Industry Regulatory Authority (FINRA) to recover investment losses related to these private placements.

Click here for all IMH Secured Loan Fund Blog Postings.

January 29, 2010

Medical Capital Update: Massachusetts Regulators Charge Securities America With Securities Fraud

Thumbnail image for medcap.jpgOn January 26, 2010, Securities America, the beleaguered brokerage firm that is already subject to a multitude of securities fraud lawsuits, including a pending class action in California, was charged by the Commonwealth of Massachusetts with misleading investors in the sale of notes issued by companies owned by Medical Capital Holdings, Inc. The regulatory complaint alleges that Securities America ignored red flags and deliberately failed to disclose the risks involved when selling $697 million worth Medical Capital Notes to unsophisticated investors. According to the complaint, investors were told that the notes were secured and low risk when, in reality, the notes were "unregistered, speculative, high risk securities, which were draped in the mantle of safety."

Our securities law firm has been contacted by investors who purchased Medical Capital Notes from stockbrokers at Securities America, National Securities Corporation, CapWest, QA3 Financial and others. We are in the process of filing securities arbitration claims before the Financial Industry Regulatory Authority (FINRA) seeking to recover Medical Capital losses from these brokerage firms, pending further investigation.

Related Blog Posts:

Medical Capital Class Action or Arbitration: Investors Should Consider Their Options

Is Mass-Arbitration in the Client's Best Interest?

Are Securities Arbitration Cases More Financially Rewarding for Investors than Class Actions?

For more blog posts, select a category below.

January 15, 2010

Securities Arbitration Award Results for 2009 Better Than Expected for San Francisco Investors

large_san_fransico.jpgDuring my year-end review of securities arbitration award results for San Francisco, California, I made a conscious effort to limit my analysis to investor disputes involving stockbroker misconduct and breach of fidcuciary duty.

For 2009, there was a 43% increase in the number of securities arbitration cases filed with FINRA nationwide. Based on my analysis of the two-dozen or so cases that went all the way to hearing in San Francisco, I found that customers prevailed about 37.5% of the time. On a national basis, FINRA reports that investors won 45% of the 304 cases that went all the way to hearing. Are San Franciso Bay Area investors less likely to prevail in a FINRA arbitration hearing? I don't think so. When I look at the arbitration awards for San Francisco cases, I noticed the following factors that can lead to a poor result:


  • Investors who went to the arbitration hearing alone without an attorney did very poorly. Out of 8 arbitration cases analyzed, only one self-represented investor was awarded anything at all--the grand sum of $792 on a claim $37,500.

  • If only attorney-represented cases are considered, the percent of winners jumps from 37.5% to 53%. This confirms my belief that investors who have meritorious cases may have a better than average chance of winning.

  • Attorney-represented investors that did win recovered approximately 79% of their claimed compensatory damages. The reliability of this figure is somewhat questionable, however, because the damage amounts claimed could have been overstated. Also, the recovery rate was somewhat skewed by a large 7-figure award to a single customer. These results, together with other award studies that I'm familiar with, underscore the fact that arbitrators can be fairly stingy in their awards. (More on the subject of arbitrators below).

  • I was not surprised to see that certain arbitrators repeatedly found against customers. Because the arbitration rules give each side the limited ability to remove arbitrators from their case, a great deal of care and attention must be paid when selecting arbitrators. An unfortunate side effect of this system is that customers often end up with arbitrators who are "middle of the road" and have a tendency to "split the baby."

In summary, if you have a case that is truly meritorious, don't be discouraged. Rather than try to go it alone, retain an experienced securities attorney who can effectively pursue your claim and ensure that fair-minded arbitrators are appointed to your case.