Yet another embattled broker-dealer is closing.
CapWest Securities Inc. last week filed its broker-dealer withdrawal papers with the Financial Industry Regulatory Authority Inc.
According to CapWest's profile on Finra's BrokerCheck system, its status with Finra and the Securities and Exchange Commission is no longer “active.” Rather, it is listed as “termination requested.”
CapWest's chief executive, Dale Hall, confirmed that the firm filed its withdrawal papers last Wednesday.
The Lakewood, Colo., firm is another failed broker-dealer that sold private placements and private real estate deals that went bust during the credit crisis. Three series of products, Medical Capital Holdings Inc. notes, preferred stock of Provident Royalties LLC and real estate deals packaged by DBSI Inc., have proved hugely problematic for independent B-Ds that sold them, with firms unable to bear the burden of legal costs stemming from investor lawsuits.
DBSI filed for bankruptcy in 2008, and the SEC in 2009 charged Medical Capital and Provident with fraud.
CapWest brokers sold $22 million in private placements issued by Provident and $30.6 million of MedCap notes, according to court documents.
It is not known if the firm sold DBSI deals.
Some broker-dealers who sold the private deals have managed to negotiate settlements with regulators and class action plaintiffs to move past the product failures and survive.
Others, including GunnAllen Financial Inc., Jesup & Lamont Securities Corp. and QA3 Financial Corp., didn't. CapWest now joins that list.
CapWest, which had about 50 brokers, this year ran into severe hurdles.
In March, the firm reported in its annual filing that a number of events “raise substantial doubt about the company's ability to continue as a going concern.” Then, in July, it lost a $587,000 Finra arbitration claim to four clients who claimed negligence and misrepresentation in the sale of oil and gas ventures offered by Provident and Striker Petroleum LLC.
CapWest is owned by Capstone Financial Group.
Email Bruce Kelly at [email protected]
