Settlement Is Near In Securities America Case
After a federal judge in Dallas, Texas shot down a proposed $21 million settlement between Securities America and investors, the two sides have announced that they have reached a settlement. The dollar amount of the settlement has not yet been announced, nor was the amount to be contributed by parent company Ameriprise released. However, the plaintiff’s attorneys said that the figure would have to be 50 cents on the dollar, or $200 million, to get the case settled. According to sources, investor losses were set to be $400 million in private placement offerings that went bust.
Securities America has been haunted for nearly two years because of investor claims stemming from its brokers marketing and selling private placements issued by Medical capital and Provident Royalties. From 2003 to 2008, the firm’s brokers sold some $700 million of Medical capital notes and about half of those are under water. Following an arbitration award to investors for $1.2 million, Securities America said that it was facing bankruptcy due to the costs of litigation and claims exposure. This potential settlement could serve to rescue the firm from the brink of bankruptcy.