June 2010 Archives

June 15, 2010

IMH Secured Loan Fund: Investor Class Action Filed

On June 7, 2010, an IMH Secured Loan Fund Unitholder, filed a proposed class action lawsuit captioned, Charlotte Wood, on behalf of herself and all others similarly situated v. IMH Secured Loan Fund, LLC, IMH Financial Corporation, Investors Mortgage Holdings, Inc., IMH Holdings, LLC, IMH Management Services, LLC, Shane Albers, William Meris and Steven Darak (the "IMH Defendants"), before the United States District Court for the District of Arizona (the "Wood Action"), as well as an application to enjoin the vote from proceeding. In summary, the Wood Complaint alleges that the Conversion Transaction was: (1) being effectuated pursuant to a false and misleading Consent Solicitation and other false statements by the IMH Defendants, and (2) that the Conversion Transaction was both procedurally and substantively unfair to IMH Unitholders. Therefore, the complaint alleges, the Conversion Transaction is a breach of both the IMH Defendants common law fiduciary obligations to the Unitholders and their duties under the Fund's Operating Agreement.

On June 9, 2010, the IMH Defendants announced that they had obtained a sufficient number of votes to move forward with the Conversion Transaction, although the vote had not been certified, thereby mooting Wood's injunction motion. According to the preliminary results reported by IMH, 64.67% of the total membership interests submitted a vote with 57.48% of the net votes being cast in favor of the Conversion Transaction. On June 10, 2010, the IMH Defendants further announced that they were voluntarily dismissing the action entitled, IMH Secured Loan Fund, LLC v. David I. Kurtz, an individual, on behalf of himself, and all other persons similarly situated, Case No. 2:10-01071-ROS (the "Kurtz Action"), which they had filed before the Arizona court, alleging that certain Unitholders were trying to interfere with the vote.

On June 14, 2010, the "Committee to Protect IMH Secured Fund," filed an action and injunction motion similar to the Wood Action, before Vice Chancellor Leo Strine in the Chancery Court for the State of Delaware. Thereafter, the Vice Chancellor Strine held a short telephonic hearing indicating that he was denying any application for injunctive relief, but that the any harm to the Unitholders as a consequence of the Conversion Transaction and the attendant vote, could be compensated for by monetary damages. Wood has re-filed her action before Vice Chancellor Strine, and intends to continue her action for damages on behalf of the Unitholders.

Click here for more blog postings about the IMH Secured Loan Fund

June 1, 2010

California Stockbroker Discipline Report for May 2010

Thumbnail image for warning_flag.jpgThe following information regarding broker misconduct and disciplinary activities taken against California stockbrokers was released by the Financial Industry Regulatory Authority (FINRA) in May 2010:

Mission Securities Corporation of San Diego, California, was expelled from FINRA membership and the firm's principal Craig Michael Biddick was barred from association with any FINRA member in any capacity. The firm and Mr. Biddick were also ordered to pay $38,946.06, plus interest, to customers, for converting and misusing securities held in customer accounts to pay firm operating expenses.

Wedbush Morgan Securities Inc. of Los Angeles, California was censured and fined $12,500 and required to make restitution to customers totaling $5,986.26 for allegedly selling municipal securities to customers from its own account at unfair and unreasonable prices.

Martin David Batstone with Independent Financial Group in San Diego, California, and formerly with QA3 Financial Corporation was fined $5,000 and suspended from association with any FINRA member in any capacity for 10 business days for allegedly participating in the sale of equity indexed annuities when his employing brokerage firm did not have a selling agreement with the issuing companies.

Jason Allen Groth with Independent Financial Group in San Diego, California, and formerly with QA3 Financial Corporation was fined $5,000 and suspended from association with any FINRA member in any capacity for 90 business days for allegedly participating in the sale of equity indexed annuities when his employing brokerage firm did not have a selling agreement with the issuing companies. Mr. Groth consented to the described sanctions and to the entry of findings that he failed to disclose to his employing firm that he sold equity-indexed annuities with a face-value of $4,800,000 for which he earned approximately $524,142 in commissions.

Reed Theodore Johnson with CUSO Financial Services in San Diego, California, was fined $7,500 and suspended from association with any FINRA member in any principal capacity for 10 business days for allegedly approving the unsuitable sale of securities by a broker under his supervision.

Harold ("Hal") Sheldon Minsky with J.H. Darbie & Co., Inc.--recently with Strasbourger Pearson Tulcin Wolff Incorporated; Peak Securities Corporation; and also National Securities Corporation--was fined $10,000 and suspended from association with any FINRA member in any capacity for 30 days for allegedly selling unregistered stock that was not exempt from registration resulting in net proceeds of $6 million that was wired to offshore accounts.