Workman Securities Pays $700,000 To Settle Claims Involving Medical Capital And Provident Royalities Private Placements
Workman Securities has announced reaching an agreement with the Financial Industry Regulatory Authority (FINRA) to settle claims involving their sale of high risk private placements such as Medical Capital Holdings, Inc. and Provident Royalties, LLC, according to an article in Investment News by Bruce Kelly. The firm had been a large seller of those private placements that the Securities and Exchange Commission (SEC) said were fraudulent in 2009. Workman Securities agreed to pay $700,000 for partial restitution to more than a dozen investors who had sued the firm for losses in those investments.
The Medical Capital and Provident deals were widely distributed by independent broker-dealers, many of whom have had to close their doors due to the claims filed and the costs associated with them. The insurance carrier for Workman Securities, Catlin Specialty Insurance Company has paid out some $2.3 million in settlements to investors making claims. FINRA alleged that: (1) the firm failed to have reasonable grounds to think the private placement offerings were suitable for anyone after it had notice that the offering entity had financial issues and was not timely making interest payments; (2) that it failed to have an adequate supervisory system in place in connection with the sale of Regulation D private placements and (3) that it failed to conduct adequate due diligence of the private placement offering.
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