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San Diego-based WFP Securities sold California residents $27.1 million worth of notes in Medical Capital Holdings, which the Securities and Exchange Commission considered a fraud, according to a suit filed April 29 by Bank of New York Mellon. WFP sold 325 of dubious MedCap notes, according to the suit. Bank of NY Mellon and Wells Fargo were trustees in Medical Capital and were sued in a class action suit in 2009. In essence, the two banks want the broker-dealers that sold the notes, such as WFP, to share in the losses if the big banks are found liable. WFP and a web of related enterprises were subjects of my column April 20. There are 16 arbitrations and 4 written demands against the WFP enterprises because of dubious investments it sold. MedCap was considered one of the worst.

Pictured: WFP headquarters in Sorrento Valley

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Comments

ZObserver June 6, 2011 @ 9:42 a.m.

WFP apparently is pursuing a media strategy of saying nothing to anybody except as required by law. On May 31, they filed notices of discontinuation of the firm with FINRA and the SEC.

Other than that, its hard to know what is going to happen to WFP in the future. Are they about to be liquidated or forced into bankruptcy with a SIPC receiver appointed? A bit of a mystery. What happens with existing accounts and it's sales force rumored to have numbered almost 40 at one time??

Also, one has to wonder if there is a bigger SEC investigation going on here because of the complicity of certain broker dealers with the MedCap fraud as alleged in the BNYM lawsuit against WFP.

WFP had exposure to sales of Desert Capital, which has been forced into involuntary bankruptcy. Interestingly, another broker dealer named Harrison-Douglas based in CO announced it was closing very recently and they also sold Desert Capital investments and the same kinds of undeveloped land deals that WFP apparently pedaled to investors.

Stay tuned.......

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