Securities America May Have Suspected Problems with Medical Capital Notes

A federal court filing by the SEC revealed an alarming e-mail by W. Thomas Cross, an executive at Securities America. According to the July 2008 e-mail to a Medical Capital official, Mr. Cross feared a panicked run on the bank because of issues at Medical Capital. This e-mail is dated months before Securities America stopped selling the Medical Capital notes.

The SEC alleges that, since 2003, Medical Capital has raised more than $2.2 billion through private securities offerings in the form of notes, and that since August 2008, nearly $1 billion of the notes have been in default or were late in paying principal and/or interest.