CapWest Loses $940,000 Dallas Securities Case in FINRA Arbitration
Financial Industry Regulatory Authority (FINRA) has ordered CapWest Securities Incorporated to pay nearly $940,000 in a Texas securities fraud case filed by a group of investors over the recommendation and sale of numerous illiquid, risky, convertible debentures. The claimants had accused CapWest of breach of fiduciary duty, breach of contract, state and federal securities law violations, fraud, gross negligence, negligence, and other actions.
Last month, the FINRA arbitration panel ordered CapWest to pay claimant Robert E. Lee, both as an individual and as a Robert Earl Lee Revocable Trust trustee, $137,000 in compensatory damages. CapWest was also ordered to pay $478,500 in compensatory damages to Beatrice M. McCrae and Buford E. McCrae, both as individuals and on behalf of B.E. McCrae Family Limited Partnership. Robert E. Lee was also to receive $37,330 in interest for the period of October 25, 2008 through July 15, 2011 at a 5% per annum rate. For Buford E. McCrae and Beatrice E. McCrae, the interest of 5% per annum was $95,180 for the period of October 16, 2006 through July 15, 2011. Under the Texas Deceptive Trade Practices Act, Robert E. Lee is to receive $17,450 in punitive damages. Buford E. McCrae and Beatrice M. McCrae are to get paid $57,370. Payment of the claimants’ costs, legal fees, and other fees were also granted.
This kind of loan can lets its holder convert it into stock. In certain cases, the bond’s issuer may also do this. When employing the convertibility option, the issuer is allowed to pay a reduced interest rate on the loan. Companies use these financial instruments to get capital that they need to maintain or grow their operation.
This Dallas securities fraud case isn’t the only arbitration case that CapWest has recently lost. Also last month, a FINRA arbitration panel awarded CapWest clients and former broker Attila Toth $438,000 in damages and another $130,000 in legal fees and interest.
CapWest sold two private placements–$22 million in Provident Royalties LLC-issued private placements and $30.6 million in Medical Capital Holdings Inc. notes that the SEC claims were fraudulent. Once a leading seller of private placements, CapWest is in financial trouble. Earlier this year, the broker-dealer reported that a drop in net capital, an increase of securities fraud lawsuits against it, and three years of losses in a row have raised concerns over whether the financial firm can stay in operation.
Texas Securities Fraud
If you are an investor who has sustained financial losses from working with a broker-dealer or an investment adviser, our Texas securities fraud law firm can advise you of your options. Securities claims and lawsuits can be complex cases and you do not want to go into arbitration or court without an experienced Houston securities fraud lawyer representing you.
To obtain your free case evaluation, contact our Dallas stockbroker fraud law firm today. Our Texas private placement attorneys have helped thousands of investors recoup their losses.
Will arbitration loss cap CapWest?, Investment News, August 15, 2011
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Houston Securities Fraud: Ex-Citigroup Broker Accused of Stealing Millions from Wealthy Mexican Investors is Barred from FINRA, Stockbroker Fraud Blog, July 29, 2011