Apparently short on cash, broker/dealer Capital Financial Services is trying to combine 36 separate investor arbitration claims and lawsuits as part of a class action settlement. The claims are tied to private-placement sales totaling millions of dollars in Provident Royalties.
As reported Jan. 23 by Investment News, a federal judge recently issued an order stating that all arbitration claims and lawsuits against Capital Financial Services would be halted until he decided if they should all become part of a single class action lawsuit.
Combining the pending litigation, which involves sales by broker/dealers of Provident Royalties LLC private placements, could save them millions of dollars in damages and legal fees, according to the Investment News story.
Capital Financial is among several broker/dealers named in the class action, Billitteri v. Securities America Inc. Other defendants listed include National Securities, Next Financial Group and QA3 Financial Corp.
The lawsuit itself was filed in the summer of 2009, after the Securities and Exchange Commission (SEC) charged Provident Royalties with fraud and allegedly running a Ponzi scheme. According to the SEC’s complaint, Provident sold $485 million in securities and developed a wide network of independent broker/dealers to pitch the investments to investors.
Court documents show that Capital Financial is facing 36 separate legal cases from investors who bought almost $11.9 million in Provident Royalties private placements.
As it is, however, Capital Financial may have little money for legal fees and claims. According to court filings, its assets include $1.4 million of insurance and $120,000 in excess net capital, totaling $1.52 million. That means Capital Financial has about 12 cents per dollar available for clients who have sued the firm or plan to.
Arguments for and against combining the arbitrations and other lawsuits against Capital Financial are scheduled to be heard at a hearing in April.
If you’ve suffered financial losses of $100,000 or more in PRovident Royalties or Securities America and believe those losses are the result of inadequate information on the part of your broker/dealer, please Contact Us.