More Legal Pain For Securities America, Other Private Placement Brokers
- Created: Friday, 27 May 2011 06:43
Wells Fargo and Bank of New York Mellon were assigned to act as trustees over Medical Capital's accounts and are theoretically liable to pay out if a pending class action action against that company succeeds.
In order to get that money out of the brokerage firms that sold Medical Capital products -- now known to contain bad hospital debt -- the banks are separately suing the brokerage firms.
The suit against the banks is very different from the ones that brought down about half of the brokers that sold Medical Capital to their clients.
Whereas the brokers have been charged with not doing their homework, the banks have been charged with letting Medical Capital executives draw money directly out of the client accounts -- breaching their fiduciary duty.
It's not clear how blaming the brokers again will pass the blame for that, if the courts find that it really happened. But the banks are trying.
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