Medical Capital Investor Receives $400,000 Arbitration Award For Reg D Private Placement Investment

June 1 - In the first successful claim against a broker for selling Medical Capital notes, FINRA has ordered broker-dealer Peak Securities Corp. to pay customer Marilyn Hazell $400,000 that she lost in a Medical Capital Holdings fund.

Hazell filed arbitration claims against Peak Securities, the broker-dealer that sold Hazell Medical Capital notes. Hazell alleged breach of contract, breach of fiduciary duty, negligence and fraud stemming from the purchase of Medical Provider Fund VI notes offered by Medical Provider Funding Corp.

Private placements in Medical Capital are at the center of a July 2009 fraud complaint by the SEC. In its complaint, the SEC charged Medical Capital Holdings with fraud in the sale of $77 million in notes. According to the SEC, Medical Capital told investors that any funds raised from its private placement deals would be invested in medical receivables. The SEC alleges that the Medical Capital took $25 million in administrative fees for one fund, Medical Provider VI.

This will likely be the first of many arbitration awards against the brokerage firms who sold the Medical Capital notes. Brokerage firms selling such offerings have due diligence duties prior to approval of their sale, and representatives are required to make suitable recommendations to their customers. Additionally, brokers may not misrepresent the risk of securities they recommend and they must disclose material facts related to risk.

The attorneys at Napoli Bern Ripka have experience litigating numerous cases on behalf of customers who were sold fraudulent private placement investments similar to Medical Capital Holdings private placement investments. If you are an investor who purchased these offerings, please contact us today to discuss your potential claim against Medical Capital and the individual broker-dealers who sold Medical Capital notes.