In a win for investors, a federal district court judge rejected a proposed settlement of the class action suit against Securities America Inc. that would have allowed the company to pay $21 million to end the class action fraud suit and all arbitration cases from investors who opted out of the class action.
In Sify Finance, it was noted in Judge rejects Securities America class settlement, that the company was alleged to have defrauded investors of about $400 million between 2003 and 2009 stemming from shale gas ventures through Provident Royalties LLC and debt sales under the aegis of Medical Capital Holdings Inc. These two companies have been charged with fraud by the Securities and Exchange Commission.
The settlement would only have repaid investors a tiny fraction of what they lost. Judge Furgeson of U.S. District Court acknowledged that investors stood little chance of recouping their losses, but rejected the proposal anyway as insufficient.
Attorneys for the class action plaintiffs and for Securities America contended that the deal was the best they could do under the circumstances, and that forcing the defendant to pay more would bankrupt the company.
Attorneys for the investors, many of whom are pursuing their own claims in arbitration where securities cases are generally litigated, argued that Ameriprise Financial Inc., the parent company of Securities America, was doing just fine financially and would keep its subsidiary capitalized. They also felt the company could offer much more in settlement.
Information and data within this post gathered in association with New Jersey family law attorneys.
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