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Category Archives: CapWest

CapWest Ordered to Pay $9M Over Failed Private Placements

Clients of CapWest Securities received a vindication of sorts today when an arbitration panel of the Financial Industry Regulatory Authority (FINRA) ordered the broker/dealer to pay $9.1 million in damages and legal fees stemming from sales of failed private investments in Medical Capital Holdings and Provident Royalties LLC.

The problem is that CapWest closed last year, so the likelihood of investors receiving any substantial financial recovery from the award is slim.

Both Medical Capital and Provident Royalties were charged with fraud by the Securities and Exchange Commission (SEC) in 2009.  Investors across the country lost millions of dollars from investments in private placements from the entities.

The $9.1 million award is believed to be one of the single largest arbitration awards based on sales of failed private placements, according to a Jan. 19 article by Investment News.

Provident Royalties Private Placements Haunt CapWest Securities

Sales of risky private placements in Provident Royalties and DBSI Inc. have come back to haunt broker/dealer CapWest Securities, possibly putting its future existence in peril.

As reported April 26 by Investment News, CapWest Securities stated in its latest filing with the Securities and Exchange Commission (SEC) that a number of events – including a rash of lawsuits tied to private placement deals that went south – has “raised substantial doubt” about the company’s ability to meet regulatory net-capital requirements.

CapWest is far from alone. Several other broker/dealers that sold private placements have shuttered in recent months, including QA3 Financial Corp. in February. As a result, regulators are stepping up their oversight of private placements and the broker/dealers that market and sell them to investors.

According to court documents, CapWest brokers sold about $22 million of private placements issued by Provident Royalties LLC. In the summer of 2009, the SEC charged Provident with fraud. CapWest also sold an unknown volume of sales in DBSI Inc., a packager of real estate deals that is now in bankruptcy court.


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