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16 arbitrations and 4 written demands registered against WFP Securities

Although some of the posts here seem a bit bleak, I suspect that recoveries are going to be much better than one might expect. First of all, this matter is going a lot further than just the arbitration process conducted by FINRA. So far, FINRA has made very favorable awards to claimants and also added punitive fines to be paid to the client. This has caused some of the broker dealers to go out of business because of lack of capital. Even if the broker doesn't have enough capital, the errors and omissions insurance policy might kick in. Secondly, MedCap principals have been charged with fraud for operating a ponzi by the SEC. The SEC now has a receiver who is in process of completing forensic accounting to unravel about 10 billion of transactions. When this forensic accounting job is concluded you can be assured that the receiver will file "clawback" lawsuits against any party that was a "net winner" in doing business with MedCap. This clawback action probably will include firms with deep pockets such as the banks who as trustees allowed the ponzi to occur. It may also include all broker dealers who were paid commissions and other fees to sell this stuff of investors. Thirdly, you probably haven't heard the end of it. Once the SEC can get its arms around the extent of the ponzi and who enabled it, they will likely unleash substantial criminal investigations and indictments. Do you remember the fiasco when Coastal Insurance and FGS Insurance agency were accused of skimming by the Cal Insurance Dept in the late 80's? The same guy, Sid Field, ran MedCap.
— April 25, 2011 9:19 a.m.

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