Corporate & Securities Law

Medical Capital Holdings Broker Surrenders Securities License

By Mark Maddox

Medical Capital Holdings broker John B. Guyette has surrendered his securities license to practice business in Colorado over what regulators say was a violation of state and federal securities laws regarding sales of private placements in Medical Capital Holdings. Guyette also is no longer registered with the Financial Industry Regulatory Authority (FINRA).

Colorado regulators allege that Guyette sold the private placements to a number of investors with whom he did not have a prior relationship, which is a violation of Regulation D. Regulation D is the federal securities law under which private placements are offered.

?I surrendered my license; I did not lose it,? said Guyette, who contends that he personally invested more than $200,000 in Medical Capital notes. ?I voluntarily resigned rather than take this to the next level [court]. I decided not to fight this, and retired,? he said in an April 13 story in Investment News.

Guyette neither admitted nor denied the allegation by Colorado regulators, but nonetheless agreed to the order.

Private placements have come under fire by state and federal regulators following a 2009 announcement by the Securities and Exchange Commission (SEC) to file fraud charges against Medical Capital Holdings. According to the SEC?s complaint, Medical Capital allegedly operated much like a Ponzi scheme.

Since 2003, Medical Capital raised $2.2 billion from six private placement offerings to 20,000 investors nationwide. Things started to go haywire in the summer of 2008, when many Medical Capital borrowers began defaulting, which resulted in late interest payments to investors throughout 2009. Since then, investors have filed several complaints against Guyette alleging losses of $600,000.

Guyette and his business partner, Tom Miller, sold Medical Capital securities through Elite Investments; other broker/dealers marketed and sold the placements through CapWest Securities in Greeley.

Guyette remains licensed to sell securities in California, Illinois and Wyoming. According to an April 13 article by American Chronicle, Guyette sayshe has no plans to fight the state of Colorado for the return of his license or move to states where he is licensed.

Full post as published by Representing Investors on April 13, 2010 (boomark / email).