A March 3, 2011 Reuters article reports Ameriprise Financial Inc. has agreed to agreed to settle two class action lawsuits for $27 million dollars. The suits involve the sale of private placements in Medical Capital and Provident Royalties by the firm’s subsidiary Securities of America, Inc(SAI). The companies both failed in 2009 and were subsequently found to be Ponzi schemes. It is estimated SAI clients lost as much as $400 million on the investments.
While the settlement has been applauded by the class action attorneys and Securities of America, plaintiff’s attorney’s representing investors in individual FINRA arbitration claims are far less enthusiastic. If a federal judge in Texas has his way, the arbitration claims will be rolled into the class forcing those investors to accept far less then could potentially be won through arbitration. The judge, W. Royal Ferguson, Jr. had ruled in mid-February the arbitration claims should be combined with the class action and stayed three FINRA arbitrations that were scheduled to be heard in the coming weeks. A hearing on the approval of the Ameriprise settlement is set for March 18, 2011. It is anticipated the attorneys representing investors in FINRA arbitration claims will object to combining the claims and the settlement. The fact SAI was pleased with the initial ruling in February is telling as the firm hopes to avoid having to pay what these claims may ultimately be worth in the eyes of arbitrators.
The rules under Regulation D are very specific as to who may purchase these investments and often the brokers do not do an adequate job of qualifying the potential purchasers. If you have purchased a private placement from SAI or another brokerage firm and lost money as a result, you may have a claim for damages. Please contact our office for a free case evaluation.