On April 2, 2013, a federal judge rejected Wells Fargo & Co.’s request to dismiss investors’ class action against it. These investors suffered investment losses in Medical Capital Holdings Inc.-issued notes. In addition to the class action, many investors are choosing to file an individual securities arbitration claim with the help of a securities fraud attorney.
U.S. District Court for the Central District of California judge David Carter denied in part Wells Fargo’s motion for summary judgment, allowing some of the claims made by investors to move forward.
Medical Capital is a medical-receivables company that was charged with fraud by the Securities and Exchange Commission in 2009 and subsequently went under. Since 2003, Wells Fargo has issued almost $2.2 billion in Medical Capital Holdings notes. The Medical Capital’s court-appointed receiver had, as of February, recovered $157.5 million for investors, but over $1 billion in unpaid principal is yet outstanding. Stock fraud lawyers hope to get that money back for their clients through the class action or individual FINRA securities arbitration claims.
Wells Fargo, as trustee of the notes, distributed investor funds so that medical receivables could be purchased by Medical Capital. According to securities fraud attorneys, investors have alleged that Medical Capital executives “used the trustee-controlled accounts as their personal piggy banks.” Reports stated that registered representatives who sold these notes said that they were given a sense of security by Bank of New York Mellon Corp. and Wells Fargo’s participation. Bank of New York Mellon agreed to pay investors $114 million in February, 2013 but a spokeswoman for Wells Fargo stated that “Wells Fargo believes it has acted appropriately and will continue to vigorously defend its case.”
If you suffered significant losses as a result of your investment with Wells Fargo in Medical Capital notes, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.