Tuesday, January 26, 2010
Massachusetts Securities Division Alleges Ameriprise Subsidiary Failed to Disclose Risks in Private Placements
The Massachusetts Securities Division brought an administrative action against Securities America, Inc., a subsidiary of Ameriprise Financial, alleging that from 2003-2008 the broker-dealer, acting as placement agent for Reg D offerings on behalf of Medical Capital Holdings Inc., failed to disclose material risks in connection with sales of approximately $697 million of promissory notes issued by SPCs owned by Medical Capital. Since August 2008 Medical Capital has defaulted on all its outstanding note obligations. The Division alleges that the firm's due diligence analyst specifically and repeatedly requested disclosure of the heightened risks.