Lawsuit Filed To Take Back Commissions Made On Provident Private Placements
By Securities Law on Jul 9, 2010 | In Legal Actions
Forty- nine broker-dealers that sold the private placements issued by Provident Royalties LLC have been named in a lawsuit filed in a Dallas bankruptcy court. On June 21, 2010 the liquidating trustee Milo H. Segner Jr. filed the lawsuit in an attempt to get back $285 million in claims and commissions from the firms.
Mr. Segner alleges that the firms “failed miserably in upholding their fiduciary obligations” when selling the series of Provident Royalties LLC private placements.
The trustee’s lawsuit is on behalf of investors who bought roughly $251 million of the Reg D offerings and paid around $34 million in commissions to the broker-dealers and their representatives.
According to the lawsuit, “The commissions, fees and payments received from Provident Royalties encouraged and played a substantial role in the negligent and/or grossly negligent conduct of the broker-dealers.”
The Securities and Exchange Commission (SEC) charged Provident and its executives with fraud in running a $485 million Ponzi scheme based on phony investments. An estimated 7,700 investors bought the private placements from June 2006 to January 2009.
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