Another Independent B-D Is Shuttered
CapWest Securities Incorporated, which is owned by Capstone Financial Group out of Lakewood, Colorado has added its name to the growing list of beleaguered independent broker-dealers that have been forced to close down because of private placements that went bust, according to Investment News. The firm filed its Form BDW with the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) on August 31, 2011. The Form BDW is the Uniform Request for Broker-Dealer Withdrawal.
CapWest follows many other independent broker-dealers who ended up biting the dust because of its selling Medical Capital Holdings Incorporated and Provident Royalties LLC private placement offerings and real estate deals bundled up by DBSI Incorporated. Medical Capital and Provident Royalties were charged with fraud by the SEC in 2009. The firm is said to have sold a combined $52.6 million worth of Medical Capital and Provident Royalties private placements and an unknown number of DBSI deals, if any. Because of the number of legal claims made by customers, the settlements, legal fees and costs involved, the independent B-Ds like CapWest simply did not have the financial where-with-all to continue operating.
The troubles had been brewing but earlier in the year, CapWest reported that there were a number of events that “raise substantial doubt about the company’s ability to continue as a going concern.” The inevitable came to pass in July 2011, when the firm was slammed with a $587,000 FINRA arbitration award related to oil and gas ventures offered by Provident and Striker Petroleum LLC. Then less than a week later on August 1, 2011, the firm was handed another adverse FINRA arbitration award for $931,960.