Blum Law Group is pursuing claims against National Financial Services, LLC (“NFS”) for investors who lost money investing over $100 million in more than 20 unregistered debt offerings sold by McGinn, Smith & Co., Inc., (“McGinn Smith”) and other entities under its ownership or control. McGinn Smith was a New York based securities broker-dealer with its principal place of business in Albany, NY. The firm also had many clients in Pennsylvania.
Chief among the investments sold by McGinn Smith were notes issued by four limited liability companies: First Independent Income Notes, LLC., First Equity Income Notes, LLC, First Albany Income Notes, LLC., and Third Albany Income Notes, LLC ( collectively, “Income Notes”). Each of these companies was wholly-owned by an extension of McGinn Smith.
McGinn Smith began using NFS, a Fidelity company, as its clearing firm in or about 2005. Many McGinn Smith clients were required to maintain an account with NFS which provided significant clearing and back office operations for McGinn Smith.
The claims allege, in part, that NFS was negligent in its pricing of the notes and breached duties it owed to the investors in negligently clearing for McGinn Smith.
In April 2010, both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) filed lawsuits against McGinn Smith and its principals, alleging that from 2003 through April 2010, McGinn Smith committed an ongoing fraud against over 900 investors.
To date, the Income Notes offered by the McGinn Smith-controlled companies are illiquid and non-performing and the majority of the loans made by these companies have not been repaid.
Since the filing of the lawsuits, the SEC has frozen some of the assets held by McGinn Smith and its principals. However, the amount frozen by the SEC represents only a small percentage of the total amount lost by investors and investors are not expected to receive a significant portion of their investments back from the receivership.
Blum Law Group has filed suit in FINRA Arbitration against NFS on behalf of investors seeking to recover losses in investments offered by McGinn Smith. If you lost money from the purchase of investments sold to you by McGinn Smith or its affiliates, please contact Blum Law Group at 1-877-STOCK-LAW (1-877-786-2552) for a free case evaluation.