Posted On: August 30, 2009

Stockbroker ordered to pay $7 million securities arbitration judgment

Blum Law Group and its co-counsel have obtained one of the single largest arbitration awards against an individual financial advisor.

The award was against a former Boca Raton stockbroker who was ordered to pay a $7 million arbitration award — including $4 million in punitive damages — by a FINRA arbitration board.

The FINRA arbitrators found Gary J. Gross made false representations and didn’t tell customers about the risks and suitability of securities he bought for them while working for Axiom Capital Management and UBS. The investments included private placements, mutual funds and low-priced securities.

Many of Gross’ customers were elderly and lost their life savings. Gross preyed on members of his community and continues to live in the same home valued in excess of several million dollars.

The FINRA award found Gross fabricated values while generating commissions from frequent trades on customer accounts and engaged in unauthorized trading and other sales practice violations.

Last yar, Gross consented in a Securities and Exchange Commission civil case to the entry of a permanent injunction that barred him from working in the securities industry until all FINRA arbitration awards against him are concluded.

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Posted On: August 30, 2009


Investment News recently reported that multiple claims have been filed against the brokerage firms which sold interest in Medical Capital and its related business. The allegations include claims of negligence and breach of fiduciary duty,

The Medical Capital investment was a private placement. Private placements are generally considered to be risky and cannot easily be sold . However, many investors are alleging that the firms sold these interests as safe conservative investments appropriate for people seeking an interest stream in retirement or other conservative investments. Multiple issues have now been raised regarding what, if any, due diligence was done into Medical Capital and the principals of the company amongst other issues.

The law firm of Blum Law Group represents multiple investors in claims against the selling broker-dealers. If you have any information about our claims or want a free consultation to discuss your legal rights, please contact our law offices.

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Posted On: August 25, 2009

Blum Law Group to represent investors for losses in Medical Capital

On July 16, 2009, the Securities and Exchange Commission filed an emergency court action to halt a $77 million offering fraud perpetrated by defendants Medical Capital Holdings, Inc. ("Medical Capital"), Medical Capital Corporation ("MCC") and others. The SEC's complaint alleges that the defendants defrauded investors by misappropriating about $18.5 million of investor funds and by misrepresenting to investors that no prior offerings had defaulted on or been late in making payments to investors of principal and/or interest. Our investigation has learned that Medical Capital allegedly used investor funds for movie projects, personal expenses, expensive yachts and other improper activities.

However, it now appears that the fraud was much larger and that numerous brokerage firms including Securities America sold investments in Medical Capital without allegedly doing the proper due diligence.

As alleged in the SEC's complaint, the defendants defrauded investors by misappropriating millions raised through the sale of notes. The selling agents received fees and/or commissions for the sale of these investments. Many of these brokerage firms are small or regional brokerage firms which was responsible for performing a reasonable investigation before selling these investments to its investors.

To determine if some, or all, of the investment losses in Medical Capital are recoverable through FINRA securities arbitration claims, please contact Blum Law Group.

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Posted On: August 16, 2009


On July 2, 2009, the SEC obtained an emergency asset freeze and other relief in a $485 million offering fraud and Ponzi scheme orchestrated by Provident Royalties LLC and others.

The SEC allleges that from at least June 2006 through January 2009, Provident fraudulently sold stock promising profits though oil and gas assets. The complaint alleges the sales were made to more than 7,000 investors throughout the United States. It is also alleged that the sales were primarily solicited by unaffiliated retail broker-dealers to enter into placement agreements for each offering, and those retail broker-dealers sold the stock to retail investors nationwide. However, the SEC's action does not seek any relief from these retail broker-dealers.

According to the SEC's complaint, investors were falsely promised yearly returns of up to 18 percent and misrepresented to investors that 85 percent of the funds raised through the offerings would be used to purchase interests in oil and gas real estate, leases, mineral rights, and interests, exploration and development. The SEC alleges that, in fact, less than 50 percent of investor funds were used for their stated purpose, and the proceeds from later offerings were used to pay expenses related to earlier offerings and returns to investors in those offerings.

Our firm currently represents a number of Provident investors throughout the United States in claims against the brokerage firms which sold them these investments. The firm is filing multiple claims with FINRA securities arbitration claims against the brokerage firms that sold the investments in an effort to recover clients' investment losses. The allegations include that the brokerage firms failed to perform adequate due diligence before recommending and selling the Provident and Shale Royalties investments.

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